TheCorporateCounsel.net

Earlier this month, I blogged about a recent 3d Cir. decision holding that a company could be liable for the paraphrased comments of its CEO that appeared in an analyst report. This Bryan Cave blog also discusses that case and offers up some thoughts on recommended practices for communications with analysts. Here’s an excerpt:

Care should be exercised in dealing with analysts to avoid entanglement or inadvertently disclosing MNPI.

– Consider having an FD-trained official accompany officers meeting with analysts to monitor and assist with debriefings and, when advisable, devising FD remedial steps.
– Consider maintaining logs of contacts or phone calls and contemporaneously documenting the substance of any one-on-one discussions.
– Avoid commenting on analyst reports or earnings models, except for corrections of factual misstatements consistent with publicly available historical or factual information or to correct mathematical errors.

Maintain a written record of comments, and include a disclaimer approved by legal counsel but recognize that it may not provide complete protection, depending on the facts and circumstances.

– No other feedback or guidance on analyst reports or earnings models, including as to analyst forecasts or projections, should be communicated.
– Avoid commenting on or confirming earnings expectations, except during an approved short window following, and consistent with, prior broadly noticed and disseminated guidance, such as during an earnings call, and after consultation with legal counsel.

Other recommendations include the need to review internal reports and communications in order to ensure consistency with public disclosures, the importance of using scripts and avoiding informal comments, and the need to limit review of analysts’ reports to factual matters. Most of these recommendations aren’t new – but all of them are worth taking to heart.

– John Jenkins