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Morning News

Motley Fool: SEC's Fair Disclosure Rule a Victory for Small Investors

Aired August 11, 2000 - 11:36 a.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

BILL HEMMER, CNN ANCHOR: The Securities and Exchange Commission has made a move that is sure to please a lot of small investors. The SEC has approved the fair disclosure rule. Basically, it is designed to give small investors equal access to a lot of information that stock analysts and large shareholders already get, and they get it early.

Let's explain more about it now from the Motley Fool. Here is Jay Perlman with us now from Washington.

Hey, Jay.

JAY PERLMAN, MOTLEY FOOL: Hi, Bill, how are you?

HEMMER: Good, Nice hat.

PERLMAN: Thank you.

HEMMER: And good morning.

PERLMAN: Good morning.

HEMMER: I heard somebody say this is revolutionary, is it indeed?

PERLMAN: I think it really is revolutionary. Investors, if there is one catch-phrase for what happened yesterday, the catch phrase is: Investors win. Investors are going to be provided with more information and they are going to be able to do their jobs a little bit better.

HEMMER: Jay, basically, for people who are not up to speed, so to speak on this story, the issue says that when companies release financial information to the big financial institutions in New York, or other parts of the country, at the same time that is released, or within a 24 hour period, I or anyone can access else that information by way of Internet, through the mail, et cetera, is that how it works?

PERLMAN: That is how it works. And really, if you looked at what happened yesterday, it's a real extension of what has been going on with on-line investing. The Internet has empowered investors, it has really given investors the confidence and the ability to make their own investment decisions, to do things themselves, and that what we, at the Motley Fool, preach is: You can do this yourself.

And what the Internet did is gave people that information. What yesterday's ruling did is it gave people that last bit of information that may not have been public before.

HEMMER: That being stated, even when this goes into effect, I think it is two months away, 60 days, right?

PERLMAN: Right.

HEMMER: Even when it goes into effect, and if I want to go look up a company's report, I still have to decipher it, right? I still have to understand it financially?

PERLMAN: Well, yeah, and that is what we teach people. The Motley Fool, I mean, teaches people that you can do this. You don't need a Wall Street analyst. You don't need a full-service broker to analyze it. It's really -- it's not rocket science.

HEMMER: What is the reaction from the financial institutions?

PERLMAN: Well, the financial institutions, you know, I don't think are that happy about it because what yesterday did is it created complete market transparency. What it did is it removed the cloak that shrouded Wall Street for all these years, and it's made the market extremely transparent.

Now, if analyst really -- you know analysts are out there and the industry is out there saying that individual investors need the industry. Well, now that everybody is on the same level, and has all the information, let the analysts prove it, let the industry show that they are really doing -- providing a valuable service.

HEMMER: In the short time we have left, quickly, on the ABCs of this, basically if a company has information, you can jump on board right away, instead of waiting a week for that stock to price down or price up.

PERLMAN: Exactly. Exactly.

HEMMER: We will track it. Jay Perlman, interesting issue, changing world, appreciate you sharing with us today.

PERLMAN: No, problem, Bill.

HEMMER: All right, Jay Perlman live there in Washington.

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