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Just what you need. More information.

On Monday, Oct. 23, the

Securities & Exchange Commission


Regulation FD

-- that stands for "fair disclosure." Reg FD, as the folks in the know call it, was created to promote the fair disclosure of company information to all investors, from the pros to the do-it-yourselfers.

While some critics of Reg FD say the new regulation brings only gloom and doom to the average investor, most of the experts I spoke with thought otherwise. Unless you're willing to become a fundamental analysis expert, this open-door information policy probably won't change your world too much.

But it will change the world of your fund managers and analysts. Before Reg FD, the pros were used to knocking on the CFO's door to quickly get the inside scoop on the company's fiscal health. Since that type of insider information is no longer allowed, your fund managers now will actually have to brush up on their financial statement analysis skills and crunch some numbers.

The SEC approved Reg FD back in August to help eliminate "selective disclosure." That's when a company allows a privileged few -- like analysts and very large shareholders -- a more detailed picture of its financial health. Not surprisingly, this often left individual investors way behind the eight ball with Wall Street.

Reg FD should level the playing field between investors and the pros. Ideally, that means companies will issue more press releases about earnings trends and other corporate developments, more corporate news will be posted on company Web sites and conference calls with analysts will be broadcast on the Web.

How Does this Affect Me?

"This information is important to everybody but should not really affect the long-term investor, says Thomas O'Hara, chairman, board of trustees for the

National Association of Investors


Many investors still don't know what the heck Reg FD is, according to a poll conducted by


and the

Gallup Organization

. They polled 1,007 investors randomly selected across the country who were heads of households or a spouse in any household with total savings and investments of $10,000 or more.

Tracy Eichler, investment strategist at PaineWebber in New York says 86% of those surveyed knew little or nothing about Reg FD. And when given a description of it, 40% were still unsure how it would affect them.

"I think average investors will use this extra information very little," says Dee Lee, a CFP and co-author of

Let's Talk Money

. "People don't go looking for the information that's available now," referring to sites like

FreeEdgar, that offer company filings or financial Web sites.

On the other hand, people may be more inclined to use this information because it will (let's hope) be more reliable since it's coming straight from the company, says Cathy Dixon, a securities and corporate law partner at

Weil Gotshal & Manges

and former chief counsel of the division of corporation finance of the SEC. "It's better to have the truth out than rely on information in chat rooms."

So, if you're going to read company information, then learn how to really read it. That means you need to understand how to read the financial statements. "Now more than ever, it's imperative to understand a company's business," says O'Hara.

Understanding the fundamentals will prevent you from reacting hastily to a press release that says, for instance, that sales are down for the quarter. If it's a cyclical business, that may be just fine. You do not want to risk using this information unknowingly.

It's like driving a Harley. If you don't know how to ride it, leave it in the garage.

You Stole the Other Team's Signs

Critics of Reg FD argue that this availability of information will cause the market to gyrate even more. Investors will read a press release with bad news and react in a panic, Lee says.

That may well be true for people new to the market. But in the short term, there will always be a reaction to negative news. In the midst of this earnings season, we know all too well how quickly the market reacts to bad news. So Reg FD can't make things much worse.

But maybe we're not giving the long-term investor enough credit. "I don't think investors will panic and make rash decisions," says Robert Herz, chairman of the SEC regulations committee and a


partner. "Hopefully they'll wait and see what analysts say about it and tune into news program for details."

But if we have all the information at our disposal, will we still need to wait around for the opinions of analysts and fund managers?

No doubt. Who has the time to do it them self? And even if you have the time, do you know what to do with this information once you get it?

Analysts and mutual fund mangers have an insight on all this information that the average investor does not have, says Eichler. "People are willing to pay for insight."

"You pay an advisor because they're going to watch your account the eight hours you're supposed to be working," says Lee. "You can't possibly be doing the same work as a team of analysts."

Still, Reg FD frightens analysts.

It's as if

Joe Torre


Bobby Valentine's

signs and now knows that

Al Leiter

is about to throw

Derek Jeter

a curve ball.

"You'd think the world is coming apart the way the analysts are reacting. They think they're losing their leg-up," says Dixon. But analysts and fund managers have no idea if you know how to decipher this information as quickly as they do. They can't take that risk.

Reg FD will indeed make analysts work harder. They will no longer get information early so they'll have to work quickly to get their analysis out first, says Dixon.

Just like the bursting of the Internet bubble earlier this year reminded us that earnings do matter and the fundamentals are important, Reg FD brings us back to the financial statements. Analysts will have to dissect them again and prove whether they are any good at fundamental analysis, says Dixon.

So, if you have it in you to analyze all this information, then go for it -- and take the analysts to school. If you can't or don't have the desire to, then life is status quo for you.

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TSC Investor Forum aims to provide general investment information. It cannot and does not attempt to provide individual advice. All readers are urged to consult with a professional as needed about their individual circumstances.