Final answer:
Regulation FD, adopted by the SEC in the early 2000s, requires public companies to disclose material information to all investors at the same time to promote fairness and transparency in the financial markets.
Step-by-step explanation:
Regulation FD (Fair Disclosure), adopted by the Securities and Exchange Commission (SEC) in the early 2000s, requires that public companies disclose material information to all investors at the same time. This means that when a company shares important information with certain individuals or groups, they must also publicly disclose it.
Regulation FD aims to promote fairness and transparency in the financial markets, preventing selective disclosure and insider trading. It ensures that all investors have access to the same information, reducing information asymmetry.
For example, if a company's CEO shares confidential financial projections with a group of analysts, the company must also publicly disclose these projections to all investors. This level playing field ensures that no individual or group has an unfair advantage in making investment decisions.