The Securities and Exchange Commission (the “SEC”) has approved the New York Stock Exchange (the “NYSE”) rule change prohibiting listed companies from issuing material news after market close (typically 4:00 P.M. Eastern Time, except for certain days on which trading closes early at 1:00 P.M. Eastern Time) until the earlier of (i) the publication of the company’s official closing price on the NYSE or (ii) five minutes after the NYSE market close, except following a non-intentional disclosure when the company is publicly disclosing material information in order to comply with Regulation FD under the Securities Act of 1933, as amended.
The NYSE noted in its proposed change to its rules for the public release of material information, set forth in Section 202.06 of the Listed Company Manual, that it has continued to experience situations where material news issued by companies shortly after market close has resulted in significant investor confusion. Specifically, when a company releases material news shortly after market close, but before the NYSE has published the company’s official closing price, the material news can cause the company’s stock to trade in other markets at materially different prices than the company’s official closing price on the NYSE. The rule change is intended to mitigate the possibility that a company’s closing stock price on the NYSE differs from the price at which essentially contemporaneous trades are being executed in other markets. Notwithstanding the requirement that no material news can be issued after market close until the earlier of (i) the publication of the company’s official closing price on the NYSE or (ii) five minutes after the NYSE market close, Section 202.06 of the Listed Company Manual will continue to contain a recommendation that listed companies wait to issue material news until the earlier of (i) the publication of the Company’s official closing price on the NYSE or (ii) 15 minutes after the close of trading on the NYSE.
The new rule makes clear that, despite the limited time prohibition in the rule for releasing material information after the NYSE’s official closing time, a company is never expected to withhold material information if it would violate Regulation FD.