May 6, 2009
The New York Stock Exchange has amended its immediate release policy governing listed companies’ disclosure of material information. As amended, the policy, which is set forth in NYSE Rule 202.06, allows companies to comply with the policy by using any method of disclosure allowed by Regulation Fair Disclosure (FD), rather than exclusively by press release as under the former rule. The amendment also clarifies how companies are to notify the NYSE of disclosures made before or during market hours. The amendment to Rule 202.06, which does not require Securities and Exchange Commission approval, becomes operative May 8, 2009. The SEC release announcing the amendment is available at
http://www.sec.gov/rules/sro/nyse/2009/34-59823.pdf and the changes to Rule 202.06 appear at the conclusion of this client alert.
Methods of Disclosure
NYSE Rule 202.05 requires a listed company "to release quickly to the public any news or information which might reasonably be expected to materially affect the market for its securities." Rule 202.06 previously provided for listed companies to comply with this requirement by issuing a press release. The amended rule now allows companies to release this information by any method that complies with Regulation FD.[1] Under Regulation FD, which prohibits the selective disclosure of material nonpublic information, companies must make public disclosure of material information by filing a Form 8-K or through another method (or combination of methods) reasonably designed to provide broad, non-exclusionary distribution of the information to the public. In addition to filing a Form 8-K, a company may issue a press release or hold conference calls, press conferences or webcasts, as long as the company provides adequate notice and access to the public. Moreover, in August 2008, the SEC issued interpretive guidance on website disclosures indicating that, under some circumstances, posting of information on a company website may constitute sufficient public disclosure for purposes of Regulation FD.
The amendments to Rule 202.06 harmonize the NYSE’s immediate release policy with Regulation FD and with the requirements of The NASDAQ Stock Market LLC, which previously implemented a similar change to its rules.[2] The amendments are intended to afford companies additional flexibility and will eliminate the redundancy that existed under the prior rule because NYSE companies filing an 8-K to satisfy their Regulation FD disclosure obligations also had to issue a press release. Nevertheless, the NYSE indicates that it continues to believe that the market and investors benefit from the issuance of press releases, so the rule now "encourages" companies to still issue press releases to disclose material information.
Notifying the NYSE of Disclosure
Additionally, the NYSE has amended Rule 202.06 to clarify how companies are to notify the NYSE about public disclosures of material information made shortly before the opening of or during market hours. Previously, the rule recommended that companies contact their NYSE representatives by telephone at least ten minutes prior to the release of the information. The purpose of the notification requirement is to allow the NYSE to assess the impact of the information on the market and decide whether to halt trading in a company’s stock. The amendment to Rule 202.06 now requires companies to notify the NYSE, by telephone, ten minutes prior to release, of the following: (1) the substance of the public disclosure; (2) the Regulation FD-compliant method they intend to use to make the disclosure; and (3) the information necessary for the NYSE to locate the disclosure upon publication. If the disclosure is being made in written form, the company must provide the NYSE with the text of the disclosure by email at least ten minutes prior to its release. Finally, the rule now provides that any press release or other public disclosure that may significantly affect trading in the company’s securities should be provided via email, rather than fax as required by the old rule.
[1] While foreign private issuers are not required to comply with Regulation FD, they must comply with the immediate release policy set forth in Rule 202.05, and may do so by any method (or combination of methods) that would comply with Regulation FD.
[2] In 2002, Nasdaq amended its Disclosure of Material Information rules to conform with Regulation FD. See SEC Release No. 34-46288 (July 31, 2002), 67 FR 51306 (August 7, 2002) (SR-NASD-2002-85).
Gibson, Dunn & Crutcher’s Securities Regulation and Corporate Governance Practice Group is available to assist in addressing any questions you may have regarding these issues.
Please contact the Gibson Dunn attorney with whom you work, or any of the following:
John F. Olson – Washington, D.C. (202-955-8522, [email protected])
Brian J. Lane – Washington, D.C. (202-887-3646, [email protected])
Ronald O. Mueller – Washington, D.C. (202-955-8671, [email protected])
Amy L. Goodman – Washington, D.C. (202-955-8653, [email protected])
James J. Moloney – Orange County (949-451-4343, [email protected])
Gillian McPhee (202-955-8230, [email protected])
Elizabeth A. Ising (202-955-8287, [email protected])
Added text underlined;
Deleted text in [brackets].
NYSE Listed Company Manual
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202.06 Procedure for Public Release of Information
(A) Immediate Release Policy
[The normal method of publication of important corporate data is by means of a press release. This may be either by telephone or in written form. Any release of information that could reasonably be expected to have an impact on the market for a company’s securities should be given to the wire services and the press "For Immediate Release."] Information required to be released quickly to the public under Section 202.05 above should be disclosed by means of any Regulation FD compliant method (or combination of methods). While foreign private issuers are not required to comply with Regulation FD, foreign private issuers must comply with the timely alert policy set forth in Section 202.05 and may do so by any method (or combination of methods) that would constitute compliance with Regulation FD for a domestic U.S. issuer. While not requiring them to do so, the Exchange encourages listed companies to comply with the immediate release policy by issuing press releases.
* * * * *
(B) Telephone Alert to the Exchange
When the announcement of news of a material event or a statement dealing with a rumor which calls for immediate release is made shortly before the opening or during market hours (presently 9:30 A.M. to 5:00 P.M., New York time)*, [it is recommended that] the company[‘s] must notify its Exchange representative [be notified] by telephone at least ten minutes prior to release of the announcement [to the news media], to inform the Exchange of the substance of the announcement and the method by which the company intends to comply with the immediate release policy and providing the Exchange with the information necessary to locate the news upon publication. When the announcement is in written form, the company must also provide the text of such announcement to the Exchange by email at least ten minutes prior to release of the announcement. If the Exchange receives such notification in time, it will be in a position to consider whether, in the opinion of the Exchange, trading in the security should be temporarily halted. (See Rule 123D(1) for the Exchange’s policies with respect to delayed openings and trading halts.) A delay in trading after the appearance of the news on the Dow Jones, Reuters or Bloomberg news wires provides a period of calm for public evaluation of the announcement. The halt also allows customers to revise the terms of limit orders on the specialist’s book in view of the news announcement. Even if limit orders are not canceled or changed during the halt, the fact that trading is halted results in the reopening being considered a new opening, thereby enabling limit orders to participate at the new opening price regardless of the previously entered limit. A longer delay in trading may be necessary if there is an unusual influx of orders. The Exchange attempts to keep such interruptions in the continuous auction market to a minimum. However, where events transpire during market hours, the overall importance of fairness to all those participating in the market demands that these procedures be followed.
* [Effective June 13, 1991 t]The [New York Stock] Exchange‘s off-hours trading sessions [became operational. The facility] offer[s] the opportunity to trade at NYSE closing prices after the NYSE’s 4:00 P.M. close until 5:00 P.M.
(C) Release to Newspapers and News Wire Services
News which ought to be the subject of immediate publicity must be released by the fastest available means. The fastest available means may vary in individual cases and according to the time of day. Ordinarily, this requires a release to the public press by telephone, facsimile, or hand delivery, or some combination of such methods. Transmittal of such a release to the press solely by mail is not considered satisfactory. Similarly, release of such news exclusively to local press would not be sufficient for adequate and prompt disclosure to the investing public.
To insure adequate coverage, where a listed company is satisfying the Exchange’s immediate release policy by issuing a press release, that press release[s requiring immediate publicity] should be given to Dow Jones & Company, Inc., Reuters Economic Services and Bloomberg Business News.
Companies are also encouraged to promptly distribute their press releases to Associated Press and United Press International as well as to newspapers in New York City and in cities where the company is headquartered or has plants or other major facilities.
A copy of any press release or other public disclosure made using any Regulation FD compliant method (or combination of methods) which may significantly [impact on] affect trading should also be sent promptly to the attention of the company’s Exchange representative, by [facsimile] email.
The New York City addresses and telephone numbers of these national news wire services are:
Associated Press, 50 Rockefeller Plaza, (212) 621-1500 24 hours
Fax — (212) 621-1587
Bloomberg Business News, 499 Park Avenue, (212) 318-2300
Princeton Office: (609) 750-4520
Fax — (609) 897-8394
Dow Jones & Company, Inc., 2 Harborside Financial Center, 600 Plaza, Jersey City, NJ
07311, (201) 938-5400
Fax — (201) 938-5600
Reuters America, 3 Times Square, 19th Floor, (646) 223-6000
Fax — (646) 223-6001
United Press International (202) 898-8057 24 hours
Every news release should include the name and telephone number of a company official who will be available if a newspaper or news wire service desires to confirm or clarify the release.
© 2009 Gibson, Dunn & Crutcher LLP
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