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Verdict for Reg FD Compliance

The securities fraud verdict of Galleon’s Raj Rajaratnam was welcome news for most in IR – it reinforces the need for proper legal behavior of corporate insiders and for members of the investment community. Experts are speculating whether this means more hedge funds and expert networks will enter the target zone for SEC enforcement actions, and/or if company insiders, including IR professionals, will be targeted.

I believe this verdict provides an opportunity for everyone to ensure they are operating within an ethical, legally compliant environment. Take a look at this survey executive brief from the Rotterdam School of Management about material information disclosure in one-on-one meetings or this article about concern over one-on-one meetings arranged by investment banks. Companies and investors should use these stories and the Galleon verdict as a reminder of the importance of Reg FD training and compliance.

If you have an ethical dilemma, contact the NIRI Ethics Council to discuss your situation confidentially with this group of respected NIRI members. The Ethics Council is a benefit of your NIRI membership.

Now on to a few other items that crossed my desk last week:

Are cyber attacks material information? Some lawmakers think so and are pushing the SEC to require companies to disclose when they are victims of an attack. Schapiro pressed again to expand private company shareholder base beyond 500. In House testimony SEC Chairman Schapiro outlined that her agency would examine this issue. Part of that review is expected to include an evaluation of beneficial versus registered ownership to determine if inconsistencies may cause problems. Even more listing competition. You may have heard that NASDAQ dropped their bid for NYSE. However, the global chess game for exchange dominance is not over. A few weeks ago I mentioned that the BATS Exchange is entering the listings market. BATS now plans an IPO, (the first one on its own exchange), to help fuel its expansion as the third largest stock exchange in the U.S. Meanwhile, NASDAQ received SEC approval to launch the BX Venture Market as another alternative for young companies not ready for a primary exchange listing. Make your plans now – there are less than 25 days until the NIRI Annual Conference in Orlando, Florida!

Until next week,

Jeff Morgan, FASAE, CAE
President & CEO

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