EVERYBODY FAVORS EQUAL ACCESS TO INFO, BUT SOME OF IT’S MORE EQUAL THAN THE REST: CRITICS FEAR SEC PLAN WOULD FORCE FIRMS TO HIDE EVEN MORE DOPE

Securities and Exchange Commission Chairman Arthur Levitt’s call for companies to provide investors equal access to company information is raising some concerns.

Not surprisingly, the plan’s most vocal critic is the organization representing corporate investor relations executives. Louis Thompson, president and chief executive officer of the Washington-based National Investor Relations Institute, says he agrees that selective disclosure is a disservice to investors, but worries the SEC may go too far.

“The SEC needs to be careful that it doesn’t cause companies to back off in their communications practices,” Mr. Thompson says.

He believes that continuing communication between companies and analysts is necessary and in the public interest, but stresses that analysts should not be prevented from bringing value-added information to the marketplace.

Michael Flanagan, an analyst with Financial Services Analytics Inc. in Fort Washington, Pa., agrees. “I think the chairman is on the right track in trying to level the playing field, but I wouldn’t consider the problem widespread,” he says. “In my eight years as an analyst I haven’t come across a situation which I think crosses the line.”

In his speech last week to the Economics Club of New York, Mr. Levitt continued his campaign against selective disclosure, asking companies to make their conference calls open to everyone, “post them on the Internet, invite the press.”

all should know all

Mr. Levitt said in the next few months the regulatory agency would consider proposing rules to narrow the gap between the public and “those in the know.” He said it was in the interest of fair play that all investors have access to news that could potentially move the market.

“The behind-the-scenes feeding of material non-public information from companies to analysts is a stain on our markets,” he said. “This selectiveness is a disservice to investors and it undermines the fundamental principle of fairness.”

Mr. Thompson says his group’s standards call for a press release preceding a corporate conference call, and that companies should avoid divulging any news not contained in the release.

Many companies are already using conference calls to elaborate on earnings and other company news, and a growing number let investors and reporters listen to the calls.

According to NIRI survey data, from 1998 to 1999 the number of companies allowing the press to listen to their conference calls increased from 14% to 42%, and another 17% say they are considering it.

Indeed, Mr. Flanagan, who is an analyst for the securities industry, says he recently attended E*Trade’s quarterly earnings meeting, which was an open conference call.

In his speech, Mr. Levitt also said the commission would be issuing a proposal to create a centralized national stock market with electronic links between competing markets so that investors can view the best stock prices across the different markets.