What is your understanding of Reg FD?
I’ve had this experience before but I recently met with a company that threw up the Reg FD road block on almost every question I had – this really tweaked me out. This company is basically private anyway (100m market cap, no meaningful disclosures, no IR dept, never talks to or meets with investors), so it was very frustrating that they would not answer any questions.
Two schools of thought on Reg FD:
1) Companies cannot answer anything that is not publicly available in writing.
2) Companies are generally allowed to answer questions about the business in a thoughtful discussion with investors even if some topics are not 100% spelled out in writing or disclosed to everyone AS LONG AS they don’t go over the line in conduct, such as blessing models, telling analysts they will beat the quarter, selectively disclosing major material events, and so on. This raises the question of where the line is, but I think most people of reasonable judgment can find the line – if they tell me that consensus for next quarter is $0.35 and they’re about to report $0.38, that is clearly over the line.
I can’t see how #1 makes any sense – why even meet with investors? I already read the subpar disclosures in the 10-k, thanks. I’m curious to know what others have experienced or what thoughts the rest of you have on this subject. Most of the companies I meet are pretty liberal about it as long as you don’t intentionally try to cross the line, a few will outright tell you anything you want to know, and an even smaller minority will straight up tell you material information (although this cuts both ways – they may be lying).
So basically, are companies that fall into category 1 operating under false premises, or has Reg FD fallen by the wayside and is now once again being abused by companies in category 2 (Reg FD was instituted in the year 2000)? Or is it somewhere in between?
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