Disclosure of Material Information–NYSE Telephone Alerts
Companies with stock listed on the New York Stock Exchange recently received its annual memo highlighting its most commonly applicable policies and rules. The memo’s eight pages cover a variety of fairly standard issues with which everyone is familiar. However, one reminder (back on page six) caught my eye.
The NYSE Listed Company Manual (Section 202) requires that companies promptly release to the public any news or information that might reasonably be expected to materially affect the market for its securities. In particular, Section 202.06 states that a company must call NYSE ten minutes before it disseminates any such news (or immediately upon becoming aware of such information):
- during market hours (9:30 a.m. until 4:00 p.m. New York time),
- “shortly before” the 9:30 a.m. market opening, and
- between 4:00 p.m. and 5:00 p.m. (after the market has closed).
It’s standard practice to call NYSE at least ten minutes before releasing material information during the normal trading day, and most companies are good about doing so. Calling prior to the market opening or after closing is less intuitive, however, and may not be high on everyone’s checklist.
Pre-Opening Calls. How far in advance of opening should you release information in order to avoid a special call to NYSE (in other words, what is “shortly before”)? Generally, a release prior to 9:00 a.m. will not require an advance call. Of course, if the news is huge (for example, a change in control), it is still a good idea to give NYSE a heads up no matter how early the release goes out.
Post-Closing Calls. Many companies routinely release material information at 4:30 p.m. and do not call NYSE in advance. NYSE’s view, however, is that such information can impact after-market trading. Therefore, failing to pre-alert NYSE by telephone violates Section 202.06 of the Listed Company Manual.
NYSE appears to be somewhat casual about enforcing its pre-opening and post-closing telephone alert rule (in contrast to during normal trading hours, about which it is quite serious). Nevertheless, to avoid a surprise trading halt or a notice of rule violation (which might require a Form 8-K, Item 3.01 filing), it’s a good idea to schedule your press releases for before 9 a.m. and after 5 p.m. New York time.