In August 2000 the Securities and Exchange Commission adopted new “fair disclosure” rules, known as Reg FD on Wall Street, aimed at ensuring that all investors have equal access to material financial information, according to a Wall Street Journal commentary yesterday. But in reality fair-disclosure rules create information vacuums that contribute to the downside volatility of individual securities in periods of market weakness, according to the commentary. Temporary access to additional information — in effect, temporary suspension of these rules — would produce better functioning and fairer individual security pricing. This is especially the case now, because so many companies are in the “quiet period” before they announce their next quarterly earnings.
