July 30, 2025

What is Reg FD? (And How Guidance Cheat Sheets Can Help Avoid Selective Disclosure)

Regulation FD (the FD stands for fair disclosure) was a rule adopted by the Securities and Exchange Commission (SEC) to clamp down on instances of insider trading and promote the full and fair disclosure of information by issuers.

The rule became effective on October 23, 2000, and remains in effect to this day.

From the SEC:

“The regulation provides that when an issuer, or person acting on its behalf, discloses material nonpublic information to certain enumerated persons (in general, securities market professionals and holders of the issuer’s securities who may well trade on the basis of the information), it must make public disclosure of that information.”

“The timing of the required public disclosure depends on whether the selective disclosure was intentional or non-intentional; for an intentional selective disclosure, the issuer must make public disclosure simultaneously; for a non-intentional disclosure, the issuer must make public disclosure promptly.”

“Under the regulation, the required public disclosure may be made by filing or furnishing a Form 8-K, or by another method or combination of methods that is reasonably designed to effect broad, non-exclusionary distribution of the information to the public.”

The rule itself is pretty straightforward in terms of mandating remedies if and when selective disclosure takes place.

The rule’s bigger effect, however, was to engrain in public companies, their employees, boards, and advisors, that when it comes to material non-public information (MNPI), everyone must have access to the news at the same time.

Reg FD thus standardized the public webcasting of company presentations by biotechs at healthcare investor conferences (which would otherwise be private events reserved for the organizing investment bank’s clients). Likewise, when MNPI is announced by a biotech at a scientific or medical conference (which would otherwise only be accessible to paying conference attendees), it must also be press released at the beginning of the live presentation (usually coinciding with when conference’s embargo lifts).

Public companies thus adapted fairly easily to the issue of fair public disclosure. What many still struggle with, however, is preventing selective disclosure.

What measures can be taken to avoid accidental selective disclosure?

Being forced to immediately issue an 8-K because a member of your C-suite inadvertently let slip some MNPI during an investor meeting… is not a good look.

Worse, the aforementioned investor meeting likely took place during market hours, so your 8-K may have to go out while your stock is trading (and your stock may even be subject to a trading halt). It’s going to be very visible, and damaging not only to the company, but to the executive-in-question’s career.

How then can you avoid making selective disclosures? Here are five quick tools that every public biotech should have in place.

Keep your investor-facing team small, prepped and polished:

The smaller your investor-facing cohort of executives is, the easier it is to train them (investor meeting training looks and feels very similar to media training by the way) and update them when publicly available information or guidance changes.

Make sure they understand what MNPI is and isn’t:

There are two requirements for MNPI. The information must be new (not previously made public) and material.

Revealing that the inside walls of your San Diego lab are painted blue likely wasn’t information previously in the public domain. But it is not material in the context of someone making an investment decision on whether or not to buy your stock.

Note: materiality is defined as whether the possession of the information would reasonably affect an individual’s decision to buy or sell your stock.

Quiet periods:

Unless your investor-facing C-suite members are expert poker players, it’s easier (and creates less liability) if you go into a quiet period when you are in receipt of MNPI (quarterly financial results, or perhaps clinical or preclinical data).  

Have a guidance cheat sheet:

It’s a mistake to think that management needs to have every piece of public guidance memorized. It doesn’t. Instead, it is perfectly fine to have one-pager with a biotech’s current guidance (cash runway, timing of clinical milestones, etc.) laid out for use during investor meetings.

Side note: it’s better if you just glance at a guidance cheat sheet though, rather than stopping and reading directly from it, lest you inadvertently look like you don’t know what you’re doing.

Route all incoming investor and media inquiries to IR or PR respectively:

Lastly, your investor-facing C-suite isn’t the only potential source of accidental selective disclosure. In truth, MNPI can be inadvertently divulged from any number of people in your organization. Here, the important thing is to have a policy in place for – and understood by – your workforce, to route all incoming investor and media inquiries to you IR and PR teams, who can respond appropriately in a Reg FD compliant manner.