Lesson 3 of 6
What a company may tell one person
Regulation FD requires an issuer that discloses material non-public information selectively to make it public, simultaneously or promptly. Read what it covers.
By Javier Sanz
Founder of ValueScreener. Built Ninety Nine, a securities services provider, and sold it to a tier-one global bank; ran operations and internationalization at Alpaca, the brokerage API.
Who writes thisEditorial processLinkedIn (opens in a new tab)X (opens in a new tab)
In one minute
- Regulation FD applies to the issuer, not to the investor. It requires public disclosure when the issuer has disclosed material non-public information selectively.
- Intentional selective disclosure must be made public simultaneously; a non-intentional one must be made public promptly.
- The rule lists exactly which recipients trigger it, and it states that a failure to comply is not itself a Rule 10b-5 violation.
Before this rule, a company could tell its favoured analysts something material and tell everybody else later. Regulation FD, adopted in 2000, requires the disclosure to be made to everyone, and the timing depends on whether the selective disclosure was intentional.
What the rule requires, and when
Intentional disclosure
- The person disclosing knows, or is reckless in not knowing, that the information is both material and non-public.
- Public disclosure must be simultaneous.
- There is no window in which some investors legitimately know more.
Non-intentional disclosure
- The speaker did not know it was material and non-public.
- Public disclosure must follow promptly.
- The obligation exists even though nobody intended anything.
The obligation is the issuer's, and the trigger is the recipient.
Who has to be on the receiving end
The rule does not apply to every conversation. It applies to disclosure made to persons in a listed set: brokers and dealers and their associated persons; investment advisers, institutional investment managers that filed a Form 13F for the most recent quarter, and their associated persons; investment companies and certain of their affiliated persons; and holders of the issuer's securities where it is reasonably foreseeable that the person will trade on the basis of the information.
That last category is the one a reader should notice. A shareholder who is told something material that nobody else has been told is inside the rule, without being a professional at all.
Two definitions that do the work
Reading the rule's own definitions
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Intentional. A selective disclosure is intentional when the person making it either knows, or is reckless in not knowing, that the information is both material and non-public.
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Issuer. The rule covers issuers with a class of securities registered under section 12 or required to file under section 15(d), and it expressly excludes foreign private issuers.
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Person acting on behalf of an issuer. Senior officials, and any other officer, employee or agent who regularly communicates with the covered recipients or with security holders.
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The consequence. A failure to make a public disclosure required solely by the rule is not itself deemed a violation of Rule 10b-5.
What it means for a researcher
Two things, and they pull in opposite directions.
The rule is the reason the public record is as rich as it is. Companies that would once have briefed a handful of analysts now publish the same material in filings and on recorded calls, which is where the figures this site reads come from.
It also does not protect the person listening. Regulation FD imposes obligations on issuers. It does not tell an investor what they may do with something they were told, and the previous lesson's theories are unaffected by whether the company complied with this rule or not.
The plan rule that sits next to it
One neighbouring rule is worth knowing because it explains behaviour a reader sees constantly in insider filings. Rule 10b5-1 provides an affirmative defence for trades made under a contract, instruction or plan adopted before the person became aware of material non-public information, and the Commission amended the conditions in a rulemaking effective 27 February 2023.
The amended conditions include cooling-off periods before trading may begin under a new plan. For a director or officer, the later of ninety days after adoption or two business days after the issuer discloses its financial results for the quarter in which the plan was adopted, capped at a maximum of 120 days. For other persons, and not the issuer, thirty days. The rule also requires the plan to have been entered into in good faith and not as part of a scheme to evade the prohibitions, and requires directors and officers to certify certain matters on adoption.
That is why an insider's sale can be announced weeks before it happens, and why a sale under a plan is a weaker signal than a discretionary one.
Check yourself
Whom does Regulation FD place the obligation on?
- The investor who receives the information
- The issuer, or a person acting on its behalf
- The exchange where the shares trade
Show the answer
Answer: B.
The rule requires the issuer to make public disclosure when it has selectively disclosed material non-public information to a covered recipient.What timing does the rule require for an intentional selective disclosure?
- Within four business days
- Simultaneous public disclosure
- By the next quarterly report
Show the answer
Answer: B.
Intentional disclosure requires simultaneous public disclosure; only a non-intentional one may be cured promptly afterwards.Does a failure to comply with Regulation FD by itself violate Rule 10b-5?
- Yes, automatically
- No, the rule states that a failure to make a disclosure required solely by it is not deemed a Rule 10b-5 violation
- Only for foreign private issuers
Show the answer
Answer: B.
The regulation includes an express provision to that effect, which keeps the two regimes separate.Sources
- Regulation FD, 17 CFR 243.100 to 243.103, read from the electronic Code of Federal Regulations on 2026-09-13: the simultaneous and prompt disclosure requirements, the list of covered recipients, the definitions of intentional, issuer and person acting on behalf of an issuer, and the provision that a failure to comply is not itself a Rule 10b-5 violation. The regulation was adopted in 2000.
What this leaves out
- This is education about what the rule says, not legal advice, and it does not tell any reader what they or any company may do in a particular situation.
- The rule is a United States regulation and expressly excludes foreign private issuers. Other jurisdictions handle selective disclosure differently, and rules change.
- Compliance by an issuer says nothing about a recipient's own position under the anti-fraud rules.
- Nothing here is advice about any security.