Oracles decision to cancel all one-on-one meetings with the press at its annual OpenWorld conference in San Francisco the week of Oct. 23 has led to some speculation.
Some industry experts suggest the reasons were not what Oracle claimed—that it was too busy meeting with customers to meet with an international press corps—but rather the cancelled meetings were to keep Oracle in compliance of the U.S. Securities and Exchange Commissions Fair Disclosure regulation.
In August 2000, the SEC adopted Reg. FD, as it is commonly referred to, to curb the practice of selective disclosure of material nonpublic information.
The goal, in other words, is to ensure equal disclosure of material information to investors—that any information that could affect a companys stock price is disclosed broadly.
While there is no "bright line" indication of what defines material information that could impact a companys market performance, there are parameters that Reg FD experts follow, according to Howard Kalt, an executive with Kalt Rosen & Co., a San Francisco-based firm that advises clients on Reg FD and other investor issues.
Examples of material information could include: financial results; significant contracts won or lost; acquisitions and divestitures; loss of material customers or contracts; major new product announcements; litigation threats; regulatory developments ranging from product approvals to SEC rulings; and changes in management, particularly at the CEO and chief financial officer level.
The looming threat that Ref. FD looks to avoid is a company executive inadvertently spilling material information.
"At the CEO and CFO level, those executives are usually pretty well steeped in Reg. FD, so they know what they can and cant talk about. They know how they can and cant answer a question," said Kalt.
"As you move down the chain, [departmental executives] maybe dont know, or they get trapped. The easier way out is to throw a blanket over everything. The blanket itself raises questions, but it may be the safer course of action."
Bob Wynne, the vice president of Oracle Corporate Communications, said that Oracle cancelled its meetings with the press to focus on customers—who attended OpenWorld in record numbers.
"At Oracle OpenWorld, our goal was to give our customers, guests and prospects unprecedented access to our executives, while providing the attending international media with more than 40 product, services and partner announcements," said Wynne in Redwood Shores, Calif.
"With over 42,000 attendees at this years event, our executives spent the vast majority of their time meeting with customers, which limited their availability for other activities."
However, Reg. FD experts suggest that canceling one-on-one meetings with press at a scheduled event is, while not unheard of, a rather drastic move to make.
"Its not unprecedented but its very, very rare," said Gordon McCoun, senior managing director and director of Investor Relations with Financial Dynamics, which advises companies on Reg. FD and other financial issues.
"The general guidelines are to try to find a way not to cancel. But there are times when the risk is too great and in that case, theres less pain by canceling meetings than there is risk in going ahead."
While the Reg. FD rule is generally intended for financial analysts who could act on material information, a spokesman for the SEC said a company is well within its rights to exclude the media from any discussions. (Oracle did meet with financial analysts, many who operate under non-disclosure agreements).
"If you give information to a journalist, its considered broad dissemination of information, so it meets the criteria for disclosing broadly [set forth in Reg. FD]. But that doesnt require [a company] to disclose at all," said SEC spokesman John Nester, in New York.
Financial Dynamics McCoun, however, urges his clients to avoid canceling press meetings if at all possible.
"First of all it communicates something—people know companies dont cancel one-on-ones unless its something significant [going on],"said McCoun, in New York.
"So whenever possible we try not to. But there are some cases when the risk is just too great, so the prudent thing is to cancel."
For Oracle, the cat may already be out of the bag. Some industry experts like Kalt suggest that perhaps Oracle was protecting its Oct. 26 announcement that it would provide support for Red Hat Linux—major news that was announced by CEO Larry Ellison during his keynote address.
"I am aware of the news Oracle made vis-à-vis Linux. Thats a material event from the Linux [community] point of view," said Kalt.
"But if Oracle is really doing its job properly, were going to have to wait and see."