The Securities and Exchange Commission plans to soon file its first case against a company for violating a 14-month-old rule that gives all investors equal access to important news, Chairman Harvey Pitt said. Massachusetts-based Raytheon Co., a defense contractor, and Motorola Inc., the No. 2 mobile-phone maker, are among companies under investigation by the SEC for possible disclosure violations.
“There’s little doubt in my mind that there will be some enforcement action” under Regulation Fair Disclosure, Pitt said in an interview. He wouldn’t name the company that he expects will be charged.
Massachusetts-based Raytheon Co., a defense contractor, and Motorola Inc., the No. 2 mobile-phone maker, are among companies under investigation by the SEC for possible disclosure violations. A case to enforce the so-called Reg FD may answer questions about whether Pitt, who criticized the rule when he was a private-sector lawyer representing brokerages, will go easy on companies that violate fair disclosure standards.
“An enforcement case will increase compliance by companies and brokerages because it will show that this is a real law, and not just an abstract law on the books,” Columbia University law professor John Coffee said.
The SEC has been investigating at least a half dozen cases of possible violations of Reg FD, then-SEC enforcement director Richard Walker said last May. Raytheon and Motorola both have denied any rule violations, which can lead to fines.
Raytheon declined comment Friday and Motorola didn’t respond to a request for comment. The SEC also has been investigating Abercrombie & Fitch Co. for a possible selective release of a sales forecast in 1999, the company has said. That probe began before Reg FD took effect in October 2000. A company spokesman declined comment Friday.
Bloomberg News
