What does SEC Regulation FD prohibit?

SEC Regulation FD (Fair Disclosure) is designed to ensure that all investors have equal access to material information about a publicly traded company. The regulation prohibits companies from selectively disclosing material nonpublic information to certain individuals or groups, such as analysts or institutional investors, without making that information available to the general public simultaneously. This aims to prevent instances where some investors gain an unfair advantage over others due to access to privileged information, thereby promoting a fair and level playing field in the securities markets.

The purpose of this regulation is rooted in the principle of fairness in the equity markets. By requiring that any material information disclosed by a company be made available to all investors at the same time, Regulation FD helps to enhance transparency and build trust in the financial markets. Companies are encouraged to share important developments with the public through press releases or other broad communication channels rather than through targeted communications that could advantage select individuals. This equal dissemination of information supports informed investing and helps reduce instances of insider trading or market manipulation.

The other options focus on different aspects of securities law and market behavior, but they do not capture the essence of what Regulation FD specifically addresses.