Enforcement and disclosure under regulation fair disclosure: an empirical analysis

While Regulation Fair Disclosure (FD) was designed to benefit investors by curbing the selective disclosure of material non-public information to 'covered' investors, such as analysts and institutional investors, it can also impose costs. This paper finds that FD levies three kinds of enforcement and disclosure costs. First, investors cannot recover as part of an SEC enforcement action the gains to covered investors from their alleged use of the non-public information. Second, investors lose because the market responds negatively to an SEC enforcement announcement. Third, investors suffer because some companies post their FD filings well after the due date, without earlier public disclosure.