Posted on March 19, 2010.
Other than Reg FD, is there a law that restricts the bankers and lawyers who are on the face of questions? For example, I understand the insider trading laws and violations of confidentiality, but just curious in Europe and Canada lawyers and investment bankers can answer questions from research analysts seeking clarification or additional information, but it does not seem to be the case here in the United States. So I was curious, other than Reg FD is there a specific law that restricts them (is there a period of calm during a merger or acquisition)?
The United States does have a quiet period. You can put a red herring "prospectus, but otherwise, silence is required. It is important to understand that in the United States, even if a broker wrote their phone number for you to call them on a prospectus or a smiling face, they have changed. It is now part of the disclosure, even if the company did not intend. It can be used in court. The smiling face in particular, implies some form of approval and would be charged a recommendation by management, not just the broker.
Fraud can occur by accident under the securities laws of United States and that people are extremely cautious about any non-written disclosure and filed first with the SEC. Reg FD killed access to the management of exempt persons such as analysts and accredited investors. Fraud under the securities laws do not require any form of intent. It is not even needed a lie in the strict sense.
