The Handbook of News Analytics in Finance

4.6 REGULATED VS. UNREGULATED NEWS

While news related to publicly traded businesses could be classified in many ways, there are really only two main categories that should matter: regulated news and unregulated news.

4.6.1 Regulated news

The Securities and Exchange Commission (SEC) regulates just about every aspect of the information that a business which is publicly trading on an US exchange releases into the market.

On August 15,2000 the SEC adopted regulation FD (Full Disclosure) which is the US government's attempt to control the release of material non-public information from a publicly traded company to the public.

The SEC does not define the term “material” but gives an interpretation that:

“Information is material if ‘there is a substantial likelihood that a reasonable shareholder would consider it important’ in making an investment decision. To fulfill the materiality requirement, there must be a substantial likelihood that a fact ‘would have been viewed by the reasonable investor as having significantly altered the “total mix” of information made available.’ Information is nonpublic if it has not been disseminated in a manner making it available to investors generally.”

The SEC defines “public disclosure” as:

“…issuers could meet regulation FD's ‘public disclosure’ requirement by filing a Form 8-K, by distributing a press release through a widely disseminated news or wire service, or by any other non-exclusionary method of disclosure that is reasonably designed to ...