Compliance Week Interviewed Stradling shareholder Kathleen Marcus, co-chair of the Enforcement Defense & Investigations practice group and chair of the Compliance & Corporate Governance practice group, for an article about the SEC’s recent enforcement actions in this arena. Marcus commented that some of the firm’s clients have fallen “victim to fake websites that are putting out false information. It has actually been what I would refer to as a ‘bear attack.’ They have a short position in the stock and are leaking false negative information into the market in order to cause a temporary drop in the stock price so they can take advantage of their short position.” To combat this issue, Marcus recommends that companies have only a few designated people who can speak on its behalf, thus limiting the risk if all personnel understand the policy.
In terms of Reg FD violations, Marcus stated that “Selective disclosure of information is always a risk for companies and, even though there are only a limited number of enforcement actions under Reg FD, I think company executives always have to be careful that they haven’t answered a question from an analyst or an investor that takes them one step out from what they have publicly disclosed to the market.” Marcus advises that when there is a Reg FD misstep, “there are disclosures that must immediately happen. Companies must be very diligent about making sure that occurs.” According to Marcus, “Reg FD is still alive and well, but I see it more as companies making appropriate disclosures after they have had that accidental release of information, than a lot of enforcement activity.”