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When you’re facing a federal issue, you need an attorney whose going to be available 24/7 to help you get the results and outcome you need. The value of working with the Spodek Law Group is that we treat each and every client like a member of our family.

Securities Fraud: How the SEC Enforces the Fair Disclosure (FD) Rule

Securities Fraud: How the SEC Enforces the Fair Disclosure (FD) Rule

What is the Fair Disclosure Rule?

The Fair Disclosure Rule was adopted by the SEC in 2000 to prohibit selective disclosure by publicly traded companies of material nonpublic information to certain individuals or entities such as analysts, institutional investors or other market professionals before disclosing it to the general public.

Prior to Reg FD, companies could selectively disclose important information to favored analysts or investors before making it public. This allowed certain parties to make trading decisions based on the nonpublic information, while the general investing public was still in the dark, putting them at an unfair disadvantage.

Reg FD mandates that when a publicly traded company (or a person acting on its behalf) intentionally discloses material nonpublic information to securities market professionals, shareholders, or holders of the company’s securities who may trade on the basis of the information, the company must also make public disclosure of that same information. This levels the playing field and helps protect the integrity of the market.

What is Considered Material Nonpublic Information Under Reg FD?

Information is considered material if there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision or if it would significantly alter the total mix of information available. Examples could include:

  • Earnings results
  • Mergers, acquisitions, joint ventures or changes in assets
  • New products, discoveries or developments regarding customers or suppliers
  • Changes in control or management
  • Change in auditors or auditor notification of inability to rely on financials
  • Events regarding the company’s securities

To be nonpublic, the information must not have been previously disseminated in a manner that makes it available to investors generally. The SEC has provided guidance that information is considered public only once it has been disclosed via the company’s website, press releases, webcasts, conference calls or SEC filings.

Defenses and Challenges Against Reg FD Violations

Companies and individuals accused of Reg FD violations may raise certain defenses such as:

  • The information selectively disclosed was not actually material.
  • The disclosure was unintentional and accidental.
  • Proper public disclosure was made within 24 hours (or promptly for unintentional disclosures).
  • The communication fell under the “ordinary course of business” exception.

However, the SEC usually conducts thorough investigations and it can be difficult to successfully make these claims once charges have been brought. Settlements to avoid litigation expenses and negative publicity are common.

Christine Twomey
Christine Twomey
2024-03-21
Just had my Divorce case settled 2 months ago after having a horrible experience with another firm. I couldn’t be happier with Claire Banks and Elizabeth Garvey with their outstanding professionalism in doing so with Spodek Law Group. Any time I needed questions answered they were always prompt in doing so with all my uncertainties after 30 yrs of marriage.I feel from the bottom of my heart you will NOT be disappointed with either one. Thanks a million.
Brendan huisman
Brendan huisman
2024-03-18
Alex Zhik contacted me almost immediately when I reached out to Spodek for a consultation and was able to effectively communicate the path forward/consequences of my legal issue. I immediately agreed to hire Alex for his services and did not regret my choice. He was able to cover my case in court (with 1 day notice) and not only was he able to push my case down, he carefully negotiated a dismissal of the charge altogether. I highly recommend Spodek, and more specifically, Alex Zhik for all of your legal issues. Thanks guys!
Guerline Menard
Guerline Menard
2024-03-18
Thanks again Spodek law firm, particularly Esq Claire Banks who stood right there with us up to the finish line. Attached photos taken right outside of the court building and the smile on our faces represented victory, a breath of fresh air and satisfaction. We are very happy that this is over and we can move on with our lives. Thanks Spodek law 🙏🏼🙏🏼🙏🏼🙏🏼🙌🏼❤️
Keisha Parris
Keisha Parris
2024-03-15
Believe every single review here about Alex Z!! From our initial consultation, it was evident that Alex possessed a profound understanding of criminal law and a fierce dedication to his clients rights. Throughout the entirety of my case, Alex exhibited unparalleled professionalism and unwavering commitment. What sets Alex apart is not only his legal expertise but also his genuine compassion for his clients. He took the time to thoroughly explain my case, alleviating any concerns I had along the way. His exact words were “I’m not worried about it”. His unwavering support and guidance were invaluable throughout the entire process. I am immensely grateful for Alex's exceptional legal representation and wholeheartedly recommend his services to anyone in need of a skilled criminal defense attorney. Alex Z is not just a lawyer; he is a beacon of hope for those navigating the complexities of the legal system. If you find yourself in need of a dedicated and competent legal advocate, look no further than Alex Z.
Taïko Beauty
Taïko Beauty
2024-03-15
I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence. Thank you team!
Anthony Williams
Anthony Williams
2024-03-12
Hey, how you guys doing? Good afternoon my name is Anthony Williams I just want to give a great shout out to the team of. Spodek law group. It is such a honor to use them and to use their assistance through this whole case from start to finish. They did everything that they said they was gonna do and if it ever comes down to it, if I ever have to use them again, hands-down they will be the first law office at the top of my list, thank you guys so much. It was a pleasure having you guys by my side so if you guys ever need them, do not hesitate to pick up the phone and give them a call.
Loveth Okpedo
Loveth Okpedo
2024-03-12
Very professional, very transparent, over all a great experience
Bee L
Bee L
2024-02-28
Amazing experience with Spodek! Very professional lawyers who take your case seriously. They treated me with respect, were always available, and answered any and all questions. They were able to help me very successfully and removed a huge stress. Highly recommend.
divesh patel
divesh patel
2024-02-24
I can't recommend Alex Zhik and Spodek Law Firm highly enough for their exceptional legal representation and personal mentorship. From the moment I engaged their services in October 2022, Alex took the time to understand my case thoroughly and provided guidance every step of the way. Alex's dedication to my case went above and beyond my expectations. His expertise, attention to detail, and commitment to achieving the best possible outcome were evident throughout the entire process. He took the time to mentor me, ensuring I understood the legal complexities involved to make informed decisions. Alex is the kind of guy you would want to have a beer with and has made a meaningful impact on me. I also want to acknowledge Todd Spodek, the leader of the firm, who played a crucial role in my case. His leadership and support bolstered the efforts of Alex, and his involvement highlighted the firm's commitment to excellence. Thanks to Alex Zhik and Todd Spodek, I achieved the outcome I desired, and I am incredibly grateful for their professionalism, expertise, and genuine care. If you're in need of legal representation, look no further than this outstanding team.

The biggest challenge to Reg FD came in 2020 when the SEC amended it to expressly deny private rights of action. This means only the SEC can bring enforcement actions under Reg FD, private investors and shareholders cannot sue for alleged violations. This addressed concerns over frivolous lawsuits and companies disclosing less information out of litigation fears.

 

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