First Solar Stupidity
Remember the radio program where Paul Harvey would famously tell listeners "the rest of the story"?
Back on Sept. 21, 2011, shares of the solar energy systems provider plummeted 7% after select analysts covering the company were informed it would not seek a $1.9 billion federal loan for its 550-megawatt Topaz project, one of the largest solar projects ever to be constructed. First Solar stock fell an additional 6% the following day, after it confirmed through a press release that the Topaz project would not receive a government loan guarantee.Because the institutions were able to act on the Topaz information prior to the general public, TheStreet reporter Eric Rosenbaum alertly asked the question on that second day of the selloff of whether First Solar had violated the Securities and Exchange Commission's Fair Disclosure Regulation, known on Wall Street as Reg FD, which stipulates that an officer or director of a company cannot make any disclosure of a material nature about its business on a selective basis. "Solar market insiders say that as many as five analysts were called on Wednesday by the head of First Solar investor relations, Larry Pollizotto, and told beginning Wednesday morning that First Solar might not get Topaz, but they felt good about the other two projects receiving loan guarantees," wrote Rosenbaum on Sept. 22, 2011, in a column titled "Did First Solar Just Walk a Fine Reg FD Line?" So what happened to First Solar in the two years since TheStreet broke the news that First Solar was keeping ordinary investors in the dark? That is, other than the stock going on a rollercoaster ride from $80 to $12 to $40? Well, last Friday the SEC charged Polizzotto, who is no longer with the company, with violating Reg FD on the matter. (For the record, Rosenbaum is no longer with TheStreet either.) Polizzotto agreed to pay $50,000 to settle the SEC's charges, without admitting or denying the findings. The SEC did not bring an enforcement action against First Solar because of "the company's extraordinary cooperation with the investigation among several other factors." (Also for the record, that's a load of crap.) "Polizzotto offered previously undisclosed information to select analysts and institutional investors and left the rest of First Solar's investors in the dark," Michele Wein Layne, director of the SEC's Los Angeles Office, said in a statement. "All investors, regardless of their size or relationship with the company, are entitled to the same information at the same time." And now you know the rest of a very, very dumb story.