What is an “investor conference call” or “webcast”?

An investor conference call is a telephone conference that is originated by senior management of a public company and is open to the general public. These calls typically are broadcast live over the Internet and are sometimes referred to as webcasts.

During an investor conference call, management makes a presentation about a significant development involving the company. The most common type of investor conference call involves the announcement of the company's financial results (the so-called “earnings call”), but calls also can involve other developments, such as a significant acquisition. Management's presentation is preceded by cautionary language about forward-looking statements and non-GAAP financial measures that will be included in the presentation, and generally is followed by a question and answer session between management and conference call participants. See How often do companies host investor conference calls ? and Forward-Looking Statements and Non-GAAP Financial Measures.
Which officers present information on investor conference calls?

The typical investor conference call includes presentations by operating and finance personnel. For example, in an earnings call, the CEO or COO will discuss the highlights of the period, as well as general operating trends or developments such as new product introductions, and the CFO will present the company's results. Investor relations personnel also typically participate in the call to assist in the formal presentation or in the question and answer session that follows. Depending on the nature of the news to be announced, other officers also may participate. Because investor conference calls typically last about an hour, companies limit the number of participating officers to those most knowledgeable about the news to be announced.
Who listens to investor conference calls?

In the wake of Regulation FD, which prohibits selective disclosure of material non-public information, virtually all companies broadcast their investor conference calls live over the Internet. Anyone with an Internet connection can join. This type of broadcast satisfies Regulation FD's requirement for “broad, non-exclusionary distribution of information to the public.”

Regulation FD does not restrict a company's ability to limit who can ask questions on an investor conference call, and most companies only allow questions from market professionals, such as analysts. Since companies that try to restrict the ability of particular analysts to ask questions have come under fire in the press, companies generally do not attempt to prevent analysts from queuing up to ask questions. However, it is not unusual for companies to select the order of the first few questions.

A company that conducts investor conference calls without making them broadly available risks violating Regulation FD. In restricted-access calls, the company would be limited as a practical matter to discussing previously announced information to avoid inadvertent selective disclosure of material non-public information.
Do journalists listen to investor conference calls?

Journalists often listen to investor calls since the calls are publicly accessible, but they generally do not ask questions. In fact, real time media coverage allows a company to comply with the requirement for “public disclosure” in Regulation
FD.
How often do companies host investor conference calls?

Companies typically host investor conference calls to announce their results following each fiscal period. Most companies issue their earnings press releases within a few weeks after the close of a fiscal period and well in advance of filing their SEC periodic reports, although some companies issue their earnings press releases concurrently with filing those reports. Investor conference calls to announce earnings generally are held on the same day that an earnings press release is issued or the immediately following morning.

In addition to earnings calls, companies also host calls to address other important developments, such as:

- significant merger, divestiture, and acquisition activity;
- major product developments or launches; or
- adjustments to a company's prior earnings expectations.
Are companies legally required to host investor conference calls?

No. In fact, there is no legal obligation for companies to communicate with analysts or investors at all beyond the periodic reporting requirements of the SEC and the public announcement requirements of the stock exchanges. Some companies issue an earnings press release, but decide not to host a conference call.

As a practical matter, however, analysts and investors expect companies to have conference calls, and companies find the conference call to be an effective means to deliver news, gauge market reaction to news, and clarify aspects of company news that may raise questions in the analyst or investor community. In adopting Regulation FD, the SEC also acknowledged the “online revolution” that has “created a greater demand, expectation, and need for direct delivery of market information.” See SEC Release No. 33-7881. If a company does not have conference calls, its reputation in the market or analyst coverage may be affected.
What time of day do companies host investor conference calls?

Investor conference calls typically are not held until at least a few hours after the company has disseminated a press release announcing the news to be discussed on the call. Generally, companies prefer to issue their press release either before or after regular trading hours in their home market to avoid possible trading disruptions and to give analysts and investors time to digest the information.

For extremely material information, a company may ask the principal exchange where its stock is listed to suspend trading in its stock to allow the information to be widely disseminated before trades can be made based on the new information, although this circumstance is rare.

Analysts and journalists often want to know the “story behind the story” for a recently issued press release, but management should resist the urge to speak privately with analysts after a press release is issued and before the conference call is held to avoid inadvertent selective disclosure in violation of Regulation FD. See Preparing for and Conducting Investor Conference Calls and Selective Disclosure under Rule 10b-5 and Regulation FD.
What is a “black-out” or “quiet” period?

A black-out or quiet period is a specified period during which no one at the company may comment externally about the company's results.

Black-out periods generally occur at the end of a fiscal period when the company begins to discern the results for the period. At that time, the company is particularly at risk for inadvertent violations of Regulation FD. The imposition of a black-out or quiet period eliminates that risk.

Generally companies memorialize their black-out periods in their external communication policies. Since imposition of a black-out period is a common practice, it does not adversely affect a company's relationships with analysts, journalists, or investors. See What should an external communication policy address?

In the wake of several SEC enforcement actions under Regulation FD, some companies have become more cautious and have lengthened their black-out or quiet periods, but only a very few companies have prohibited private conversations with analysts altogether. See these FAQs for more information on Regulation FD.
Must a company issue a press release announcing the subject matter of an investor conference call?

Technically, no. A press release is not required, but issuing a press release in advance of an investor conference call is an efficient means of disseminating complex information. A press release enables analysts and investors to evaluate the information prior to the call, and permits management to focus during the call on the most important aspects of the release. In addition, it may be necessary or desirable to issue a press release under rules other than Regulation FD. For example, securities exchanges require that companies issue press releases to disclose material developments. See Section 202.00 of the NYSE Listed Company Manual; IM-4120-1 of the NASDAQ Manual. For U.S. companies, SEC rules also provide an exemption from the obligation to report on Form 8-K information disclosed orally, telephonically, or by webcast or similar means, if the information is provided as part of a presentation that is complementary to, and initially occurs within 48 hours after, a related written announcement or release that has been furnished to the SEC on Form 8-K (Item 2.02). Other conditions applicable to this exemption are that the presentation be previously announced to the public and broadly accessible to the public and that financial and statistical information in the presentation be contained on the company's website.

Finally, a company must provide adequate notice of the investor conference call. This is typically done by press release, although the SEC has stated that notice posted on the Internet also is sufficient. See How do investors find out the timing for an investor conference call ?
How do investors find out the timing for an investor conference call?

The SEC staff has stated that companies wishing to use an investor conference call to disseminate information must provide adequate public notice of the call. The notice must include the date and time of the call and details about how people can participate. What constitutes adequate notice depends on the circumstances. For earnings announcements, which occur regularly, several days' notice would be reasonable, while notice may be shorter in the case of unexpected events. The SEC staff also has encouraged companies to indicate in their notices whether a transcript or replay of the conference will be available and for how long. See Telephone Interpretation No. 3 in the Fourth Supplement to the SEC's Manual of Publicly Available Telephone Interpretations.

Companies typically provide notice of their investor conference calls by press release, although the SEC has stated that notice posted on the Internet is sufficient. Companies that rely on press releases nonetheless often also post announcements of their investor conference calls in “investor calendars” available on their websites.

Establishing a routine approach to the investor calendar helps ensure that investors do not draw erroneous inferences about whether an announcement will be positive or negative. For example, an earnings call held later than the company's historical practice may be interpreted as an indication that results for the period were poor.

There are third-party website directories that track upcoming investor conference calls. Most of these websites, as well as many company sites, allow investors to register to receive free e-mail alerts about a company's conference call schedule.
See Who maintains a directory of upcoming investor conference calls?
What if a company inadvertently discusses material information in an investor conference call that was not mentioned in the related press release?

Generally, there is no Regulation FD violation so long as the investor conference call was open to the general public and adequate public notice of the call was previously given. However, in an extreme case there is the possibility that the content of the notice is not sufficient. See How do investors find out the timing for an investor conference call? For instance, it would not be appropriate for a company to announce revised earnings guidance in a call “noticed up” for a discussion of Far East expansion plans.

If the call is not open to the general public or was not appropriately “noticed up,” the disclosure of material information will constitute a violation of Regulation FD. Information is material if a reasonable investor would consider it important in making an investment decision. Materiality must be judged in light of all the facts and circumstances, including both qualitative and quantitative considerations. See How is material information distinguished from immaterial information?

Regulation FD violations may be “intentional” or “unintentional.” For these purposes, a violation is “intentional” if the speaker recognized that his or her statement was material. Intent does not hinge on whether the speaker planned in advance to make the statement.

For intentional violations, public disclosure must be made simultaneously. For unintentional violations, public disclosure must be made promptly and within 24 hours. In all cases, the company probably can reduce the risk of being charged by the SEC with a Regulation FD violation if it acts in good faith by promptly issuing a subsequent press release or filing a Form 8-K (Item 9.01) that contains the information disclosed. Even companies that have publicly accessible investor conference calls nevertheless may wish to issue a press release with the previously undisclosed material information announced on the call. This approach allows journalists and others that rely on press releases to obtain the information, and reduces the risk that the original press release is considered misleading due to a material omission. Depending on the nature of the information, it also may be necessary to comply with exchange regulation requiring dissemination of material information by press release. See Section 202.00 of the NYSE Listed Company Manual; IM-4120-1 of the NASDAQ Manual.
Who is helping companies put their investor conference calls on the Internet?

Many service providers assist companies to webcast their conference calls, including Thomson CCBN, Vcall, On24, and InCommSolutions. The service model varies, but most service providers offer some standard features, such as transcription services and free investor email alerts. Pricing depends on the anticipated number of conference calls and participants per period and whether the company wants ancillary services such as live video streaming, call recording, or participant reminders.
Who maintains a directory of upcoming investor conference calls?

There are many directories of upcoming investor conference calls, some of which are powered by the service providers that assist companies to webcast their calls. Directories include investorcalendar.com, vcall.com, and bestcalls.com.

B. Preparing for and Conducting Investor Conference Calls
How should a company prepare for its investor conference calls?
A company should prepare for investor conference calls as thoroughly as it prepares press releases and SEC filings.

Typically, a script for the presentation and a list of possible questions and answers is prepared by a small team of investor relations, legal, and financial reporting personnel, as well as the presenting officers. Using a script fosters a focused message and helps reduce the risk of inadvertent disclosures of material non-public information.

The script and the expected questions and answers are reviewed for accuracy in light of historical and projected data, identifiable trends, uncertainties, and other relevant circumstances, as well as consistency with previously disclosed information. Even though inaccurate statements don't raise selective disclosure concerns (assuming the conference call qualifies as a broad dissemination), those statements can expose the company to liability under the anti-fraud provisions of the federal securities laws or trigger a duty to correct the statements. See What are the duties to update or to correct disclosure?

If a company anticipates that questions may be raised about a sensitive pending matter as to which the company does not wish to comment, it may be appropriate to announce at the outset of the call that management will not comment on the matter.
How should a company conduct its investor conference calls?
There is no required format for an investor conference call, so each company can devise its own disclosure practices, subject to applicable law.

In general, companies should consider taking the following steps:
- broadly disseminate a notice of the call several days in advance;
- script management's presentation and draft a list of possible questions and answers—in each case,
with an eye to the company's past disclosures—to prepare those making the presentation;
- draft the related press release to ensure that material information from management's script is also in the release;
- ensure that the independent auditors have finished their SAS 100 review of interim results, or substantially all of their audit procedures with respect to annual results, before issuing the press release so that the completeness and accuracy of financial information is assured;
- distribute the press release to the major news wires for immediate release and post it on the company's website;
- in the case of U.S. companies, furnish any earnings release to the SEC on Form 8-K (Item 2.02) no more than 48 hours prior to the earnings call;
- monitor the call to ensure that there is no inadvertent disclosure of material non-public information and, if there is, disseminate the disclosure broadly in a subsequent press release;
- archive the audio version of the investor conference call for a reasonable period of time on the issuer's website; and
- prepare a transcript of the call to retain in the company's internal records for future reference in planning investor events or in responding to inquiries about the call.

Companies also are required to maintain “disclosure controls and procedures” to ensure that information required to be disclosed by the issuer in reports that it files or submits to the SEC is recorded, summarized, and reported within the required timeframes. The SEC has on at least one occasion asserted that a failure to have an “FD policy” and training was a violation of this requirement. See SEC v. Siebel Systems, Inc, 2005 WL 2100269 (S.D.N.Y. Sept. 1, 2005). Although the SEC did not prevail on this claim (for other reasons), most companies document their procedures for complying with Regulation FD in an external communication policy. See What should an external communication policy address?

The SEC staff published its views about appropriate notice for an investor conference call in Telephone Interpretation No. 3 in the Fourth Supplement to its Manual of Publicly Available Telephone Interpretations.
Should companies disclose information on their conference calls that is not included in the related press release?

Such disclosure is safe in most cases, and inevitable if there is a question and answer session.

If the investor conference call is accessible to the public and appropriately “noticed up,” the information will be considered broadly disseminated and the company will have complied with Regulation FD.

In some circumstances, however, material information disclosed during the call could make an earlier press release appear misleading or may be so important that it is prudent (or required under exchange regulations) to issue a press release about the additional information. See What if a company inadvertently discusses material information in an investor conference call that was not mentioned in the related press release?
When should a company announce an unscheduled investor conference call with respect to unusual material news?
Because the mere announcement of an unscheduled investor conference call can affect a company's stock price, unscheduled calls typically are announced after market close, with the call being held shortly after the announcement or the following morning before the market opens. The SEC has recognized that companies have difficulty providing longer notice when announcing unexpected events and the information is critical or time-sensitive.

A company should keep the existence of an unscheduled call confidential until it is publicly announced, since the mere fact of an unscheduled call arguably is material non-public information. The company also should remind its webcast service provider to maintain the call's confidentiality.
How much warning does a service provider need to enable a company to conduct an unscheduled webcast?
Webcast service providers normally need a few hours' notice before holding a webcast on a same-day basis. Providing adequate public notice of the webcast is of greater concern, although the SEC staff has acknowledged that more abbreviated notice may be adequate in these cases. See Telephone Interpretation No. 3 in the Fourth Supplement to the Manual of Publicly Available Telephone Interpretations.
How should companies explain negative news in an investor conference call?
When explaining negative news, it is especially important to craft the message carefully. Candor and completeness is important, but management should resist the temptation to provide overly detailed explanations or predictions about the future. Factual information about the negative news may be limited or uncertain in its implications, or the events underlying the news may be ongoing. A premature or poorly thought-through announcement that must later be corrected or amplified can result in a loss of market credibility, increased stock price volatility, and increased liability exposure to anyone who traded on the basis of the prior announcement. Limiting disclosure to known facts and implications also minimizes the likelihood of triggering any duty to correct the disclosure. See What are the duties to update or to correct disclosure?

When negative news must be announced, management should consider whether information about remediating the underlying problem can appropriately be included in its presentation. Similar cautions apply in this case. Management should avoid premature announcements, poorly thought-through remediation plans, or overly optimistic timetables for correcting a problem.
What should a company do if it knows its earnings will not meet analyst expectations, but does not know by how much?
The appropriate course of action will depend on all the facts and circumstances. A potential earnings disappointment may not be ripe for disclosure if, for example, a company has not yet collected sufficient internal data to determine the magnitude or materiality of the shortfall. Most investor relations officers believe that the only thing worse than a “pre-release” for a period is two “pre-releases” for a period!

In general, companies are not obligated to communicate news unless they have a duty to do so under federal securities laws. The “duty to speak” can arise if the company is filing a periodic or current report (i.e., Form 10-K, 10-Q, or 8-K ) or when the company is making a securities offering. In those cases, the company has an obligation to ensure that its statements are materially accurate and complete.

When there is no duty to speak, the company may follow a “no comment” policy. If a company remains silent, insiders that are “in the know” should be reminded that they should not trade or tip this material non-public information. If they do, they risk violating the SEC's insider trading rules.

Even absent a duty to speak, there may be occasions when the company chooses to address the shortfall. A press release may be appropriate, for example, if rumors of an earnings disappointment become widespread. In some cases, the exchange on which the company's stock is listed also may ask for an explanation of the rumors and request that the company publicly address them. If the company chooses to address the rumor, its statements must be materially accurate and complete.

Preparing disclosure can be challenging if the company cannot estimate the amount of an earnings shortfall, but other disclosures (e.g., about a known sales trend) may help frame the issue. Given the uncertainty inherent in these situations, it is important that the company couple the disclosure with an appropriately tailored disclaimer addressing forward-looking statements. See What is the safe harbor disclaimer for forward-looking information?
How should a company respond to an analyst's question about a rumor?
In general, the company should follow a “no comment” policy unless the rumor is attributable to the company. Courts have upheld a company's ability to respond to questions with “no comment” since State Teachers Retirement Board v. Fluor , 654 F.2d 843 (2d. Cir. 1981). The company should not state that it does not know of any basis for a rumor or is not aware of any pending transaction, since those statements are not consistent with a “no comment” policy.

In some cases, exchange regulation may impose a duty on management to correct a rumor. For example, Section 202.03 of the NYSE Listed Company Manual states that “[i]f rumors or unusual market activity indicate that information on impending developments has leaked out, a frank and explicit announcement is clearly required,” and “[i]f rumors are in fact false or inaccurate, they should be promptly denied or clarified.” The NYSE Listed Company Manual goes on to state that “if rumors are correct or there are developments, an immediate candid statement to the public as to the state of negotiations or of development of corporate plans in the rumored area must be made directly and openly.” Violations of exchange disclosure rules do not, however, give rise to private causes of action.

Of course, if the company already has publicly addressed the rumor, it can discuss with an analyst any details that have been publicly disclosed or details that would not be “material” within the meaning of the federal securities laws. See How is material information distinguished from immaterial information ?
Do companies use slides as part of their webcast conference calls?
Many companies allow investors to view slides from a website during an audio webcast. Companies that do so should always be sure to include an appropriate disclaimer about forward-looking statements that may be included in the slides. Note that slides are considered “written” material for purposes of the safe harbor and require a more robust disclaimer than a conference call. If the slides contain “non-GAAP financial measures,” the SEC requires a legend that notifies investors of that fact and compliance with other conditions. See What is an appropriate disclaimer when a presentation includes non-GAAP financial measures ?

C. Earnings Guidance
Should a company privately state that it is “comfortable” with a particular analyst's earnings estimate or “consensus” expectations?
No, particularly given the SEC's blunt warning that companies should not manage earnings expectations. Indeed, in the adopting release for Regulation FD, the SEC stated that public company officers take on a “high degree of risk” if they have a private conversation with an analyst or other covered person about earnings guidance. This means that companies should not privately address whether they believe that results will be higher, lower, or even the same as projected. The SEC's focus on this type of selective disclosure is reflected in its enforcement actions under Regulation FD. Examples of SEC actions in which it asserted that companies had improperly commented on analyst estimates include In re Raytheon Co. , SEC Release No. 34-46897 (Nov. 25, 2002); and In re Schering-Plough Corporation, SEC Release No. 34-48461 (Sept. 9, 2003).

The conservative position is to have a “no comment” policy if asked to comment on an analyst's own estimates or on whether the company expects to meet “consensus” expectations.

If management states that it is “comfortable” with an analyst's estimate (or uses similar words such as “achievable”), it could also be considered to have “adopted” the estimate. In re Burlington Coat Factory Sec. Litig. , 114 F.3d 1410 (3d Cir. 1997) [] , the court held that “[t]o say that one is ‘comfortable' with an analyst's projection is to say that one adopts and endorses it as reasonable. When a high-ranking corporate officer explicitly expresses agreement with an outside forecast, that is close, if not the same, to the officer's making the forecast [sic].” Other examples of how expressing comfort with guidance can be actionable based on this theory include In re Gupta Corp. Sec. Litig. , 900 F.Supp. 1217 (N.D. Cal. 1994); and In re Ann Taylor Stores Sec. Litig. , 807 F. Supp. 990 (S.D.N.Y. 1992). See What is “entanglement” or “adoption”?
How should companies provide earnings guidance?

Although each company has its own circumstances, companies generally should:
- provide earnings guidance and reaffirm or comment on prior guidance only in a press release or other means that constitutes broad non-exclusionary distribution for purposes of Regulation FD; and
- adopt a “no comment” policy regarding privately commenting on their own expectations or a “black-out” or “quiet” period at the end of each fiscal period when they do not comment; and
- impose a blanket prohibition regarding addressing the guidance of others.

Even when broadly disseminated, earnings guidance involves risk under the anti-fraud provisions of the federal securities laws. Forward-looking guidance is inherently risky and often challenged in hindsight and may give rise to a duty to correct or update the guidance. When providing guidance, it is therefore also important to include an appropriately tailored disclaimer that meets the requirements of the SEC's safe harbor for forward-looking statements. See What should an external communication policy address? and What is the safe harbor disclaimer for forward-looking information? Most important, companies should ensure that their earnings guidance is as complete and accurate as it can be to avoid possible claims of manipulation. See In re International Business Machines Corporation, SEC Lit. Rel. No. 55858 (June 5, 2007).
May companies privately reaffirm earnings guidance that they issued publicly?

The SEC staff has provided informal guidance that companies may do so, but they should consider whether the reaffirmation conveys information beyond the original guidance that is material. As described below, the SEC staff notes that the timing of the reaffirmation is the principal factor in determining whether additional material information has been conveyed. See Telephone Interpretation No. 1 of the Fourth Supplement to the Manual of Publicly Available Telephone Interpretations. Statements about being “on track” are arguably as material as saying “we're not on track.” Privately saying that expectations are now lower or higher than what was last publicly provided is always problematic.

Private reaffirmation of guidance late in the earnings cycle for a given period is very risky, given that the company generally has a good idea about its results by that point. Shortly after the adoption of Regulation FD, a senior enforcement official at the SEC also suggested that risk be evaluated in light of:

- how much time has passed since the company gave public guidance (only a few days likely will not raise an issue, but a week or longer can increase the risk);
- where the company is in its earnings cycle (it's safer to confirm guidance early in the quarter than later); and
- whether intervening circumstances have occurred that would likely cause a reasonable investor to question the continued accuracy of the last guidance.

At least one enforcement proceeding under Regulation FD confirms that the SEC continues to focus on where in the earnings cycle the reaffirmation occurs. In SEC v. Flowserve Corp. , SEC Lit. Rel. No. 19154 (Mar. 24, 2005), a company was subject to sanction due to management's reaffirmation of earnings guidance that had been publicly disclosed less than four weeks before, although it was 42 days before the end of the fiscal year.
Should companies have private conversations with analysts?

Regulation FD does not flatly prohibit private conversations with analysts. Rather, the rule restricts what can be said selectively to certain types of investors, including analysts and other investment professionals. The SEC has nonetheless acknowledged that analysts play a significant role in analyzing information available to the market. Relationships with analysts remain valuable, and “one-on-one” communications with analysts continue to occur notwithstanding Regulation FD.

In general, private communications by a company official with an analyst will not raise issues so long as the company official understands the requirements of Regulation FD, is well versed in the company's prior public disclosures, and understands what topics are “off limits” for discussion. It also may be wise to have more than one company official present to help ensure that material non-public information is not disclosed. Most companies now require, where practicable, that company officials be accompanied by an investor relations professional when meeting privately with analysts or other investment professionals covered by Regulation FD.

Companies typically address the procedures they follow in conducting private meetings with analysts and other investment professionals in their external communications policies. See What should an external communications policy address ?
How should companies conduct private conversations with analysts?

Each company has its own culture and circumstances, but a company generally should:
- only hold conversations regarding financial matters shortly after issuing an earnings release when all material information about the company should be available to the market;
- avoid conversations regarding financial matters during the company's “black-out” or “quiet” period;
- inform the analyst of the ground rules up front, listing those topics that are “off limits” and sharing the material features of the company's external communication policy;
- ensure that all company spokespersons are knowledgeable about the company's business so that the information provided is materially accurate and complete and consistent with the company's prior public disclosures and its guidelines on areas that are “off limits” for discussion;
- explore ways to publicly disclose information that it wants to freely discuss in private meetings, such as adding more detailed financial information to its earnings releases or SEC reports;
- try to have another employee present, such as an investor relations professional, who can help prevent disclosure of material non-public information or correct inadvertent errors that the company official may make; and
- avoid unplanned private conversations that can more easily lead to inadvertent disclosure of material non-public information.
Should a company assist analysts so that their projections are within a reasonable range?

No, since this is akin to discussing earnings guidance privately. Companies should not “walk the Street up or down” or help analysts with their models.

The risk is that the company can be perceived as attempting to influence analysts and their expectations. This can be a violation of Regulation FD and also can cause the company to become liable for the analyst's estimates based on theories of “entanglement” or “adoption.” See What is “entanglement” and “adoption”? Companies also may become subject to claims that they manipulated guidance to improperly influence analysts' models. See In re International Business Machines Corporation, SEC Lit. Rel. No. 55858 (June 5, 2007).
Does Regulation FD require companies to provide earnings guidance?

No, Regulation FD does not require earnings guidance or impose any duty to disclose any other types of forward-looking information. A company can choose not to predict future results (or even refuse entirely to have investor conference calls), but it may have a duty to update or correct projections that it previously announced publicly.

As a practical matter, Regulation FD has resulted in more forward-looking earnings information becoming publicly available because this type of information historically was provided privately or on analyst calls that were not open to the public. Those communications are now open to the general public to avoid violations of Regulation FD.

Recent studies by the National Investor Relations Institute and McKinsey suggest a trend among companies away from quarterly earnings guidance, although most companies continue to provide annual earnings guidance (generally using a range) or other forward-looking information about the key drivers of their results. See Hsieh, Koller, and Rajan, “ The Misguided Practice of Earnings Guidance,” The McKinsey Quarterly (Mar. 2006); National Investor Relations Institute, “ Executive Alert: NIRI Issues 2006 Survey Results on Earnings Guidance Practices ” (Apr. 6, 2006).
Does Regulation FD require companies to update earnings guidance?

The SEC staff has confirmed that Regulation FD does not itself entail any duty to update. See Telephone Interpretation No. 2 in the Fourth Supplement to the Manual of Publicly Available Telephone Interpretations. While courts in a few jurisdictions have suggested that this obligation may exist, virtually all companies explicitly disclaim any duty to update in their disclosures. Often this is done as part of the company's disclaimer to comply with the SEC's safe harbor for forward-looking statements.

A company should consider updating its guidance if its circumstances have changed materially such that the guidance may have become misleading. Unduly prolonging disclosure of negative news may affect the company's credibility with analysts and investors and could aggravate negative market reaction to the news.
Do companies provide projections during investor conference calls?

It depends on the company. Most companies provide some type of “outlook” information. The type of guidance provided can include earnings guidance, expectations about overall company performance or prospects, information about how particular segments or business units performed, or perspectives about the likely future direction of key contributors to future performance (e.g., commodity costs). The timeframe for projections also varies, depending on the nature of the information and the company's circumstances, but can range from the next quarter to the period covered by the company's long range plans.

A March 2006 survey of more than 650 companies suggests a trend away from quarterly earnings guidance and toward annual earnings guidance, and indicates that companies are increasingly providing qualitative and quantitative information about market condition, industry drivers, and trends to the market. The same survey suggests that companies that provide earnings guidance do so using a range of earnings per share estimates, rather than a single “point” earnings per share estimate. See National Investor Relations Institute, “ Executive Alert: NIRI Issues 2006 Survey Results on Earnings Guidance Practices ” (Apr. 6, 2006).
How may a company reduce the risk of liability if it provides projections?

A company can reduce this risk by ensuring that it has a reasonable basis for any projections and that the projections are made in good faith. SEC rules also provide a safe harbor from liability for forward-looking statements] so long as the company complies with various conditions, which include the company's identification of factors that may affect the matters covered by those statements. See What is the safe harbor disclaimer for forward-looking information?

Projections and other forward-looking information should be consistent with the company's internal analyses and Board of Director presentations, since these documents may be discoverable in litigation. If the company plans to address future expectations about particular matters on a regular basis, it should develop a consistent approach to those disclosures, both to facilitate preparation of disclosures and to ensure that successive disclosures effectively update past disclosures.

D. External Communication Policies

Are companies required to have an external communication policy?

No. Regulation FD does not require companies to adopt policies and procedures to avoid violations. However, in adopting Re gulation FD , the SEC stated (in footnote 90) that it expects most companies to use policies as a safeguard against selective disclosure of material non-public information.

Public companies in the United States are required to maintain “ disclosure controls and procedures ” to ensure that information required to be disclosed in public reports is recorded, processed, summarized, and reported within the required timeframes. Having a written external communication policy can be an important part of disclosure controls and procedures and should be coordinated with other aspects of a company's disclosure procedures such as those relating to the company's periodic and current reports.

The SEC also has stated (in footnote 90 of the Regulation FD adopting release linked above) that adherence to a policy may be relevant in determining whether a selective disclosure was intentional and that identifying authorized spokespersons can reduce the universe of employees directly subject to Regulation FD.
What should an external communication policy address?

Company policies differ in scope; there is no “one size fits all” policy. A company's communication policy should be realistic and reflect achievable behavior, not lofty goals that cannot be met with a high degree of certainty.

An external communication policy might:
- explicitly prohibit selective disclosure in violation of Regulation FD;
- designate company spokespersons principally responsible for communications with the analyst and investor community;
- require prompt and complete information flow to authorized spokespersons and counsel who need to make materiality judgments on an ongoing and rapid basis;
- designate the disclosure team responsible for external communications (normally counsel, the CFO, and other financial reporting and investor relations personnel);
- address how public disclosures will be prepared and made, including a designation of those responsible for making threshold determinations of materiality;
- require that the disclosure of that information be accompanied by an appropriate “safe harbor” statement under the Private Securities Litigation Reform Act;
- limit the use of non-GAAP financial measures, and require that use of those measures comply with the reconciliation and other requirements of applicable SEC rules
- offer guidelines for conducting “one-on-one” communications with analysts and other investment professionals to minimize the risk of inadvertent violations of Regulation FD;
- establish procedures for distribution of investor communications;
- establish a “black-out” or “quiet” period for investor communications;
- explain procedures for addressing rumors about the company, including a “no comment” policy restricting responses to inquiries about rumors;
- identify circumstances under which a written confidentiality agreement may be required as a condition to providing material non-public information to third parties;
- provide guidelines for the review of analyst reports, consistent with applicable law;
- set out procedures to address inadvertent selective disclosures; and
- identify the person(s) responsible for administering the policy.
Policies must be reasonable and not aspirational. The violation by a company of its own policy can exacerbate an already difficult situation. See SEC v. Flowserve Corp., SEC Lit. Rel. No. 19154 (Mar. 24, 2005).
How should a company draft an external communication policy to allow its authorized officers to disclose a reasonable amount of information to the public?

A company's policy generally will not limit the types of disclosures that a company may make. The best way to ensure that company spokespersons have flexibility in their communications is by making sure that the company's SEC reports fully address matters those individuals may wish to address on an ongoing basis.

That said, a well-drafted external communications policy should enable a company
to:
- timely consider alternative means of disclosure;
- develop consistent disclosure practices;
- reduce the likelihood of inadvertent disclosures; and
- enable officers to say “no” to requests for information that the company does not wish to disclose publicly.

How many officers should a company designate as authorized spokespersons?

Companies generally designate very few officers as spokespersons—typically no more than three or four. Authorized spokespersons generally include those individuals who are most likely to have ongoing communications with investors, such as the CEO, the CFO, the heads of investor relations and corporate communications, and the general counsel. Typically these individuals also have the authority to designate “temporary” spokespersons, such as division or unit heads who are asked to participate in a particular investor conference call or other presentation.

Limiting the number of spokespersons increases the likelihood that public statements are made only by those persons who have access to the best and most current information about the company and should facilitate training efforts and consistency in the company's communications. The SEC staff has clarified that, by limiting the number of spokespersons and designating them in a written policy, a company generally can avoid liability under Regulation FD for communications made by unauthorized persons. See SEC Release No. 33-7881 at footnote 90. See also Are companies responsible if an employee who is not identified as a Regulation FD spokesperson improperly trades or tips ?

All other employees should refer inquiries to the designated spokespersons. Listed U.S. companies also are required to maintain governance guidelines that address the operation of the board of directors. See Section 303A.00 of the NYSE Listed Company Manual and Rule 4350-1 in the NASDAQ Manual. Those guidelines typically state that management speaks for the company. Thus directors should also refer inquiries to the designated spokespersons.
Should companies educate employees on how to handle questions even if they are not authorized spokespersons?

Yes. One consequence of Regulation FD is that analysts seek to obtain information from a larger pool of employees, so it's important to train employees to refer inquiries to authorized spokespersons.

Communications by unauthorized employees normally are not subject to Regulation FD, but circumstances could trigger a duty to make a broadly-available disclosure. Many companies also have policies that prohibit employees from sharing company information with third parties except in the ordinary course of business. Companies should regularly remind employees of the importance of maintaining the confidentiality of company information.

E. Selective Disclosure under Rule 10b-5 and Regulation FD
- How is material information distinguished from immaterial information?
  
  The U.S. Supreme Court has held that information is material if “it would have been viewed by the reasonable investor as having significantly altered the ‘total mix' of information available.” See Basic v. Levinson , 485 U.S. 224 (1988). The Second Circuit has stated that a fact is material if it is “reasonably certain to have a substantial effect on the market price of the security” or “if there is a substantial likelihood that a reasonable person would consider it important in deciding whether to buy or sell shares.” Both quantitative and qualitative considerations must be taken into account in making materiality determinations. See SEC Staff Accounting Bulletin No. 99 —Materiality (Aug. 12, 1999).
  
  Some types of information are generally always material. A classic example is earnings announcements, because this information will almost always affect the trading price for a company's stock. Other types of information that are usually considered material include a decrease or increase in the dividend rate or a proposed stock split; significant acquisitions or dispositions of assets or businesses; sales of significant amounts of securities; a change in control of the company; and a significant change in management.
  
  Shortly after the adoption of Regulation FD, a senior enforcement official at the SEC identified the following non-exclusive factors that increase the likelihood that the SEC will view information as material for purposes of Regulation FD: (i) the company is releasing the information late in its earnings cycle; (ii) the company has not released information to the public in a relatively long period of time; or (iii) major intervening news events affecting the issuer have occurred since the company's last public communication.
  
  Some statements have been declared immaterial as a matter of law. These include “puffing” statements such as “our company is poised to carry the growth and success of the past year well into the future.” Due to the imprecision and subjectivity of materiality determinations, companies should exercise prudence in crafting their public announcements to avoid liability for material omissions or misstatements.
  
  Companies that are public in the United States also are required to maintain “disclosure controls and procedures” to assure timely dissemination of material information. An important component of these controls and procedures is the means by which information about the company reaches the officers who must make materiality decisions and how those decisions are made. For these reasons, and to facilitate compliance with Regulation FD, companies often identify the officers responsible for making materiality decisions in their external communication policies. Those officers typically include those who are designated to speak for the company. See What should an external communication policy address?
- How does Rule 10b-5 apply to company disclosures?
  
  The application of Rule 10b-5 to company disclosures has been largely developed by the courts. Liability under the Rule attaches only when information is “material,” which is a highly fact-intensive determination based on both quantitative and qualitative considerations. See How is material information distinguished from immaterial information?
  
  Courts have established three overarching principles in applying Rule 10b-5. First, Rule 10b-5 does not by itself ordinarily require a company to make any disclosure, and the timing of disclosure is generally up to the company, subject to SEC reporting requirements. Second, if a company chooses to communicate, the communication must be materially complete and accurate. Finally, company officials must not disclose material non-public information selectively if they receive any personal benefit from the disclosure, including a “reputational” benefit.
  
  In two key cases, the U.S. Supreme Court established that mere possession by an analyst of material non-public information—or even trading on the information—does not result in liability under Rule 10b-5 unless the analyst knowingly received the information as a result of a breach of a fiduciary duty or other relationship of trust or confidence by another. Whether a disclosure is a breach of fiduciary duty depends on the presence of an improper personal benefit. Personal benefits can be tangible (e.g., financial gain) or, at least under one SEC proceeding now considered somewhat anomalous, intangible (e.g., reputational). See Chiarella v. United States , 445 U.S. 222 (1980); Dirks v. SEC, 463 U.S. 646 (1983); SEC v. Stevens, SEC Lit. Rel. No. 12813 (Mar. 19, 1991).
  
  The SEC adopted Regulation FD in part because of the difficulties the SEC faces in proving an improper personal benefit under Rule 10b-5. Regulation FD prohibits selective disclosure of material non-public information to market professionals and security holders in circumstances in which it is reasonably foreseeable that they will trade on the basis of the information.
  
  All companies, whether U.S. or non-U.S., are subject to civil, administrative, and criminal liability under Rule 10b-5.
- Who is subject to Regulation FD?
  
  Regulation FD applies to all companies that file reports with the SEC, other than foreign private issuers (generally companies organized outside the United States ) and certain investment companies.
  
  The prohibition of Regulation FD applies to communications made by “persons acting on behalf” of a company with certain investment professionals (e.g., brokers, dealers, investment advisers, and investment companies) and holders of the company's securities in circumstances in which the company may reasonably foresee that the holder will trade in the company's securities on the basis of the information communicated.
  
  Under Rule 101 of Regulation FD, a “ person acting on behalf ” of a company generally means any director, executive officer, investor relations or public relations officer of the company (or person with similar duties), or any other person who regularly communicates with market professionals or security holders.
  
  To narrow the group of persons covered by Rule 101, many companies identify those officials responsible for company communications in their external communication policies. Those officials typically include CEO, the CFO, the heads of investor relations and corporate communications, and the general counsel. Most companies also have governance policies that specify that management speaks for the company, rather than members of the board of directors.
  
  Although Regulation FD does not apply to foreign private issuers, many of those companies voluntarily comply with Regulation FD and often are subject to home country regulation containing similar prohibitions against selective disclosure.
- Who can bring claims under Rule 10b-5 and Regulation FD?
  
  Claims under Rule 10b-5 can be brought by the SEC, the Department of Justice (for criminal proceedings), and by private plaintiffs. By contrast, Regulation FD is enforceable only by the SEC, but violations of Regulation FD may have an effect on claims brought by others.
- What are the duties to update or to correct disclosure?
  
  The duty to correct a prior statement arises when the person who made the statement discovers that it was materially inaccurate or incomplete when made. In these circumstances, the statement should be corrected within a reasonable period of time.
  
  The duty to update a prior statement may arise if circumstances have subsequently changed so that the prior statement is no longer materially accurate and complete. The U.S. circuit courts are split as to whether a duty to update exists. In those circuits where the duty has been recognized, courts generally have narrowly interpreted the duty.
- Are companies responsible if an employee who is not identified as a Regulation FD spokesperson improperly trades or tips?
  
  The SEC staff has confirmed that, in these circumstances, any disclosure of material non-public information is not a violation of Regulation FD. The employee would, however, be potentially liable for “insider trading” and the company could be potentially liable as a “controlling person.” See Telephone Interpretation No. 14 in the Fourth Supplement to the Manual of Publicly Available Telephone Interpretations ; SEC Rel. No. 33-7881 (Aug. 15, 2000), note 37.
- What should a company do if it discovers that an employee improperly provided selective disclosure of material non-public disclosure to an analyst or other person covered by Regulation FD?
  
  The company should promptly make the information publicly available by broadly disseminating it. It also should consider contacting the SEC and the exchange on which its stock is listed, particularly if the employee traded or tipped, since cooperation in an investigation often carries weight with regulators and may help convince them that the company should not be penalized for the employee's actions. Companies should consider these suggested courses of actions regardless of whether the employee is an authorized spokesperson.
- What type of liability does an analyst incur for receiving selective disclosure of material non-public information?
  
  Due to the important role that analysts play in disseminating information to the market, the mere receipt of material non-public information will not expose an analyst to liability. In Dirks v. SEC , 463 U.S. 646 (1983), the U.S. Supreme Court absolved the analyst from liability in part for this reason. The SEC acknowledged its deference to analysts due to their role in the market when it proposed Regulation FD. See SEC Rel. No. 33-7787 (Dec. 20, 1999). The exchanges also encourage companies to provide information to analysts, as reflected for example in Rule 202.02 of the NYSE Listed Company Manual.
  
  Analysts can, however, be liable if they use the selectively disclosed information to violate the anti-fraud provisions of the federal securities laws:
  
  - by trading on the non-public information for their own account; or
  - by tipping the information to others, including through a breach of “information barriers” between the public and private sides of the investment bank.
  
  If an analyst violates the anti-fraud provisions, the company employee who made the selective disclosure could be exposed to liability under Rule 10b-5.
F. Review of Analyst Research
- Does Regulation FD prohibit companies from commenting privately on an analyst's model?
  
  That depends on whether, in doing so, the company conveys material non-public information. In its Telephone Interpretation No. 7 of the Fourth Supplement to the Manual of Publicly Available Telephone Interpretations, the SEC staff stated that a company would not be conveying material non-public information if it shared “seemingly inconsequential data, which pieced together with public information…helps form a mosaic that reveals material non-public information.” A company could nonetheless be exposed in this case to a risk of “entanglement” with or “adoption” of the analyst's model. See What is “entanglement” and “adoption” ? and Should a company review a draft analyst report ?
- Can a company become liable for the contents of an analyst report?
  
  Yes, if a company:
  - becomes “entangled” with the report or “adopts” it; or
  - provides false information to the analyst.
  
  Many factors are relevant to both the “entanglement” and “adoption” theories and both should be considered when evaluating potential liability exposure when asked to review an analyst's report. See What is “entanglement” or “adoption” ? A company also can be liable for violations of Regulation FD if, during a review of an analyst report, the company discloses to the analyst material non-public information. See Who is subject to Regulation FD?
  
  As a practical matter, the likelihood of incurring liability for entanglement, adoption, or selective disclosure in the context of research reports has been reduced as a result of Regulation FD, which prohibits selective disclosure to analysts, and 2002 rules implemented by the NYSE and NASD that limit the analyst's ability to request that a company review a report.
- What if an analyst provides false information to the market that it received from a company?
  
  Companies can be liable for false information provided indirectly through intermediaries, such as analysts. If an analyst knowingly includes the false information in a research report, the analyst may also be liable. See Cooper v. Pickett, 137 F.3d 616 (9th Cir. 1997).
- What is “entanglement” or “adoption”?
  
  If a company participates actively in the preparation of an analyst report, it risks being characterized as “entangled” with the report or as having “adopted” it. In these circumstances, the statements in the report may be deemed to be those of the company, making the company liable for the accuracy and completeness of the statements. For example, a company would almost certainly be entangled if it were to draft any portion of the report. Less overt involvement also can result in entanglement, such as reviewing a report before it is issued and making changes to assumptions or conclusions. Companies that endorse a published report risk similar liability exposure based on a theory of “adoption” of the analyst's statements.
  
  Elkind v. Liggett & Myers, Inc., 635 F.2d 156 (2nd Cir. 1980), was the first time the entanglement theory was asserted. The Elkind court asserted that entanglement can occur when the company has made an implied representation that the information reviewed is accurate or that it is consistent with the company's own views. In Elkind , the company was found not to be liable under the entanglement theory as it had merely corrected factual errors and had not commented on earnings forecasts included in the report. Other cases addressing this type of liability include In re Cabletron Systems, Inc. , 311 F.3d 11 (1st Cir. 2002) (report based on representations by company officials); SEC v. Wellshire Securities , 773 F.Supp. 569 (S.D.N.Y. 1991) (company officials commenting on draft research reports); and In re Presstek, Inc. , SEC Rel. No. 34-39472 (Dec. 22, 1997) (significant company commentary on analyst report, including commentary that made report misleading).
  
  An example of a case involving “adoption” is In re Burlington Coat Factory Sec. Litig. , 114 F.3d 1410 (3d Cir. 1997), in which the court held that “[t]o say that one is ‘comfortable' with an analyst's projection is to say that one adopts and endorses it as reasonable. When a high-ranking corporate officer explicitly expresses agreement with an outside forecast, that is close, if not the same, to the officer's making the forecast [sic].”
  
  As a practical matter, the likelihood of incurring liability for entanglement or adoption has been reduced as a result of 2002 rules implemented by the NYSE and NASD. These rules prohibit analysts from submitting draft reports to companies for approval, although they may ask companies to review the report for factual accuracy so long as the report does not include the research summary or the analyst's rating or price target. Concerns about violating Regulation FD have also made companies less willing to review analyst research reports.
- Is a company responsible for an analyst's research report if its website links to it?
  
  It's unclear. Although the SEC has provided guidance on links generally, it has not yet addressed the application of the “entanglement” theory to linked information. See SEC Rel. No. 33-7856 (May 4, 2000), notes 53-55 and accompanying text; see also RealCorporateLawyer's FAQs on hyperlinks. Companies could be liable under a theory of “adoption” of the report if the link is viewed as an endorsement of the views expressed in the report. See What is “entanglement” or “adoption”?
  
  That said, most legal practitioners would agree that it is problematic to include links only to favorable reports and most would advise their clients not to provide any links to analyst reports. In part this is due to the proliferation of research about companies that is now available on the Internet, which increases the risk of criticism based on “cherry-picking,” and in part this is due to the risk of liability based on an adoption theory. For the same reasons, it is problematic to include a link to a broad or summary source of earnings guidance such as First Call.
  
  Some companies provide a list of analysts who cover the company, without including the reports. While this minimizes the risk of liability under theories of “entanglement” or “adoption,” it still exposes the company to criticism if the list includes only favorable reports. In general, most legal practitioners would advise against including on the company's website even a list of analysts who cover the company. See Should a company list which analysts cover it on its website?
- Should a company review a draft analyst report?
  
  Rules implemented in 2002 by the NYSE and NASD prohibit analysts from submitting draft reports to companies for approval, although they may ask companies to review reports—minus the research summary and the analyst's rating or price target—for factual accuracy.
  
  If a company chooses to review a report for factual accuracy, it should be careful to so limit its review and to document the extent of its review. For example, when providing comments, the company could attach a letter that notes that its review was solely for purposes of correcting factual errors and that it hasn't reviewed any other information, including forward-looking statements, and is not responsible for any errors in the report.
  
  If an analyst provides a draft that is not in compliance with the NYSE and NASD rules mentioned above, the company should return the report without comment pending receipt of a compliant draft. This will avoid any implication that the company may have commented inappropriately on the analyst's model, forecasts, or price targets or revealed material non-public information to the analyst.
  
  Most companies address the ability of company officials to comment on analyst reports in their external communication policies. Those policies should clarify that company officials may review only those draft reports that include information permitted by the NYSE and NASD rules and solely for purposes of correcting factual errors. See What should an external communication policy address?
- Should a company list which analysts cover it on its website?
  
  In general, most legal practitioners would advise against including a list of analysts who cover the company. The administrative effort to keep the list up to date and the risk of exposure to liability have discouraged most companies from attempting to maintain lists of analyst coverage.
  
  Although a mere list of analysts should not constitute “entanglement” with or “adoption” of the analysts' views, a company could nonetheless be exposed to criticism if it fails to list all of the analysts that cover it, particularly if the company lists only “friendly” analysts. Linking to the reports themselves will of course present a greater risk that the company could be responsible for the contents of the report under the “entanglement” or “adoption” theories of liability. See What is “entanglement” and “adoption”?
  
  Even if a company posts a list that purports to include all analysts, there should be a disclaimer indicating that:
  - the company believes the list is complete, but provides no assurances;
  - the analysts are independent of the company; and
  - the company does not endorse the views expressed in any of the reports.
  
  A company should date the list and keep it updated. Companies should consider removing any list of analysts during a pending securities offering to eliminate any risk that the analyst reports will be considered part of the company's offering materials.
G. Forward-Looking Statements and Non-GAAP Financial Measures
- What is the safe harbor disclaimer for forward-looking information?
  
  The safe harbor disclaimer is one of the conditions that Congress imposed as part of a safe harbor against liability for forward-looking information.
  
  To encourage more forward-looking information in the marketplace, Congress established the safe harbor as a way to protect companies in class action shareholder lawsuits if the forward-looking information turns out to be wrong in hindsight. In other words, if a company issues earnings guidance, those predictions are protected if the safe harbor is properly invoked. The safe harbor was created by the Private Securities Litigation Reform Act of 1995 and is set out in Section 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934.
  
  Investor conference calls typically include some forward-looking information, so the opening remarks should invoke the safe harbor with a disclaimer. The method of invoking the safe harbor differs depending on whether the forward-looking information is given orally or in writing. See How may companies invoke the safe harbor for oral forward-looking information? and How may companies invoke the safe harbor for written forward-looking statements?
- How may companies invoke the safe harbor for oral forward-looking information?
  
  Companies may invoke the safe harbor for oral forward-looking statements by stating at the outset of the presentation that:
  - the presentation may include forward-looking information;
  - actual results could differ materially from what is said; and
  - the listener can obtain, in a readily available document, a list of factors that could cause actual results to differ. As an alternative, the company may list those factors as part of its cautionary statement. An SEC filing clearly is a “readily available document,” but other documents may be as well.
  
  The safe harbor must be given anew in each call or conversation. The safe harbor for oral forward-looking statements is set out in Section 27A(c)(2) of the Securities Act of 1933 and Section 21E(c)(2) of the Securities Exchange Act of 1934 .
  
  Although it may seem awkward to invoke the safe harbor in presentations or private conversations, it is an important protection and analysts are now accustomed to the recitation of cautionary statements.
  
  If an investor conference call is archived on the company's website either by audio file or transcript, the cautionary statement about forward-looking statements should be retained. Note that a transcript is a written statement, and the cautionary statement that it contains probably will need to be enhanced. Slides that are posted on the Internet or otherwise distributed also are written statements.
- How may companies invoke the safe harbor for written forward-looking information?
  
  Companies may invoke the safe harbor for written forward-looking information by identifying the statements that are forward-looking and accompanying the forward-looking information with meaningful cautionary language about the factors that may affect those statements.
  
  The safe harbor for written forward-looking statements is in Section 27A(c)(1) of the Securities Act of 1933 and 21E(c)(1) of the Securities Exchange Act of 1934.
- How does Regulation FD affect the safe harbor for forward-looking information?
  
  The SEC stated in Note 85 to the adopting release for Regulation FD that Regulation FD does not affect the availability of the safe harbor for forward-looking information.
- What is an appropriate disclaimer when a presentation includes non-GAAP financial measures?
  
  At the start of its presentation, a company may state, for example:
  
  “Our earnings press release, including a reconciliation of certain pro forma financial information to the most directly comparable measures under generally accepted accounting principles, is posted on our website at ww.[company].com/[insert name of relevant page] .” See SEC Release No. 33-8176.
H. Transcripts and Archives of Investor Conference Calls
- Must a company tape or keep a transcript of its investor conference calls?
  
  There is no requirement to tape or keep a transcript of investor conference calls. However, most companies do keep transcripts as a record of what was in fact said in case there is a challenge to the company's disclosure. A transcript also will facilitate consistent public communications about matters of interest to the investor community. The SEC has encouraged companies to archive their webcasts.
- May a company edit an investor conference call before archiving it on its website?
  
  Companies should not edit the substance of investor conference calls (or related transcripts) before archiving them on their websites. The company could be criticized for “cherry-picking” the information provided and may potentially be exposed to liability under anti-fraud provisions of the federal securities laws. However, a company may correct grammar and other minor issues, and certainly should correct inaccuracies—either through a footnote or other appropriate means.
- Do companies archive their webcasts?
  
  Almost all companies that use webcasts will archive them on their websites.
- How long do companies archive their webcasts?
  
  There is a range of practice among companies, but most legal practitioners advise clients to archive calls no more than a few weeks to minimize the risk of liability for outdated information and the need to update the information. A regular practice of removing webcasts after a specified period of time reduces the likelihood that a particular removal will suggest that the archive was removed for a particular reason (e.g., a non-public development that has rendered the information stale).
- Do companies post transcripts of their investor conference calls?
  
  Very few companies post transcripts of their investor conference calls, archiving instead an audio file for a limited period of time. For internal recordkeeping and reference purposes, however, most companies retain a transcript of their calls. Webcast service providers typically offer a transcription service. See Who is helping companies put their investor conference calls on the Internet? Transcripts are written statements and to benefit from the safe harbor must comply with the requirements for written (and not oral) statements. See How may companies invoke the safe harbor for written forward-looking information?
- Must companies provide transcripts of their investor conference calls to the SEC?
  
  Not generally. There is no reporting requirement applicable to transcripts of investor conference calls. However, if a conference call occurs, but not within 48 hours following an earnings release, Item 2.02 of Form 8-K may require the filing of a transcript if the material non-public information regarding a completed quarterly fiscal period is disclosed on the call.

Analyst Communications

Understanding Investor Conference Calls

D. External Communication Policies

E. Selective Disclosure under Rule 10b-5 and Regulation FD

F. Review of Analyst Research

G. Forward-Looking Statements and Non-GAAP Financial Measures

H. Transcripts and Archives of Investor Conference Calls