SEC opens doors to closed meetings

The Securities and Exchange Commission's Regulation Fair Disclosure is breaking open the last bastion of secrecy on Wall Street.

Larry Dignan
3 min read
The Securities and Exchange Commission's Regulation Fair Disclosure is breaking open the last bastion of secrecy on Wall Street: the investment conference "breakout" session.

Regulation Fair Disclosure, known on Wall Street as RegFD, requires companies to deliver material information to analysts and investors at the same time. The idea behind the hotly debated rule was to give everyone a fair shot at getting information.

The rule has prompted midquarter financial updates, Webcast presentations and other speeches. Even with RegFD, however, the press is still often banned from breakout sessions at investment conferences. These sessions, which usually occur immediately after a top executive gives a presentation, allow portfolio managers and prospective institutional investors to get familiar with a company.

Of course, intrepid reporters still sneak into these top-secret sessions from time to time, but for the most part it is like breaking into Fort Knox.

Now the door to these sessions is slowly being opened. Earlier this year, J.P. Morgan H&Q allowed reporters to sit in on the question-and-answer period between companies and investors. But that investment firm's view is hardly uniform.

Some brokerages allow reporters into breakout sessions; others take a don't-ask, don't-tell strategy; and a few still won't allow the press to listen in. Just last month at its technology conference, Merrill Lynch denied reporters access to the breakout meetings. A spokeswoman said at the time that the companies making presentations requested the ban.

This week, Bear Stearns is allowing reporters into the sessions at its annual technology conference in New York. It's a big move for a brokerage that wouldn't allow the press to attend some of its conferences in recent years. In fact, Bear Stearns' move is so surprising that there were only one or two reporters, if any, in most breakout sessions.

After the presentation by EMC Executive Chairman Mike Ruettgers on Wednesday, reporters surrounded him, all trying to top each other with questions. Since executives are often whisked away to breakout sessions, they tend to track reporters like a magnet attracts paper clips.

But this time when Ruettgers was escorted out, an EMC spokesman told this reporter that the executive chairman could answer the question in the breakout session. After being asked whether the press was allowed to enter, the spokesman dutifully said, "Sure, c'mon in."

Since the press is usually banned from these sessions, the spokesman's answer was shocking. In the session, Ruettgers was at ease even though there was one bright-green press badge in the room.

Since EMC was being especially accommodating with the press, it was imperative to attend the sessions of RealNetworks and a few others. Going four-for-four in attending breakout sessions used to be the equivalent of batting .400 in baseball.

However, attending these breakout sessions wasn't such a feat. "Our policy now is to open the sessions to the media," said Bear Stearns spokesman Russell Sherman, who noted that reporters were banned from breakout sessions at last year's conference. "It was partially inspired by RegFD."

Sherman said there may be instances where reporters are banned because a company doesn't want the press in the room, but that hasn't happened yet.

Indeed, Randall Bolten, CFO of BroadVision, didn't mind the Bear Stearns media-friendly move as long as companies were informed ahead of time that reporters would be hanging around.

"In a room with investors you won't say anything different, but how you say it may be different," Bolten said. "Frankly, I don't have a problem with it, but a speaker has to know you're there."