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As Information Flows, S.E.C. Faces Difficulty Bottling It Up

Publication Date: 
May 27, 2014
The New York Times - Deal Book
Steven M. Davidoff

Professor Joseph A. Grundfest is cited in the New York Times for his arguments on whether Regulation FD is constitutional.

On Wall Street, information is “the most valuable commodity,” to quote a line from the 1987 movie “Wall Street.”

Since 2000, the Securities and Exchange Commission has sought to ensure equal access to that commodity through a rule known as Regulation FD. The rule generally requires that if a company disclosed material information to one person, it must do so to all.


Perhaps it is time to reconsider what the agency is trying to do with information. Professor Joseph A. Grundfest of Stanford Law School has argued that Regulation FD may be unconstitutional because it unnecessarily restrains a company’s free speech. He contends that equal access to investors may be compelling, but it is not an interest of the securities laws.

Professor Grundfest’s argument may or may not prove to be correct, but he has a point that the rule seems to be there just for the sake of being there.