Are you in compliance?

Don't miss out! Sign up today for our weekly newsletters and stay abreast of important GRC-related information and news.

Get updates on Compliance Week offerings, including new features, databases, research, and other resources, along with announcements of upcoming Webcasts, conferences, seminars, CPE/CLE opportunities and more.

Published every Thursday, Compliance Week Europe offers a condensed summary of risk, audit, and compliance news either originating in Europe, or of special interest to European compliance professionals. This newsletter will follow developments by the European Commission, as well as those of national governments across the region, or any U.S.-based news that might have consequence across the Atlantic. Frequency: weekly; Thursday a.m.

A fresh edition of Compliance Week delivered via e-mail and online every Tuesday morning, relentlessly focused on the disclosure, reporting and compliance requirements of our 25,000+ paying subscribers.

Published every Friday, Compliance Weekend was launched at the behest of subscribers, and offers a quick Plain English review of the week's key developments. We hope you enjoy this supplement to Compliance Week's Tuesday edition.

SEC Brings Rare Charges in Reg FD Case

Jaclyn Jaeger | September 9, 2013

In a rare enforcement move, the Securities and Exchange Commission last week charged a former head of investor relations in violation of Regulation FD.

Regulation FD requires material nonpublic information to be disclosed publicly in a broad manner, not selectively. According to the SEC's charges, Lawrence Polizzotto, a former vice president at solar energy company First Solar, violated Regulation FD when he indicated in phone conversations with some analysts and investors that the company was unlikely to receive a much-anticipated loan guarantee from the Department of Energy.

“Polizzotto offered previously undisclosed information to select analysts and institutional investors and left the rest of First Solar's investors in the dark,” Michele Wein Layne, Director of the SEC's Los Angeles Office, said in a prepared statement. “All investors, regardless of their size or relationship with the company, are entitled to the same information at the same time.”

The charges stem from an investor conference Polizzotto attended in September 2011, in which he publicly expressed confidence that First Solar would be receiving three loan guarantees totaling approximately $4.5 billion for which the company had received conditional commitments from the Department of Energy. Two days later, however, Polizzotto and several other executives discovered the company would not be receiving at least one of the loan guarantees. 

Despite knowing the company had not yet publicly disclosed the loss of the loan guarantee, Polizzotto drafted several talking points signaling that First Solar would not receive one of the three loan guarantees, and then delivered those talking points in the one-on-one calls with analysts and institutional investors, the SEC stated.

According to the SEC's order, Polizzotto violated Regulation FD during those phone conversations with analysts and institutional investors on Sept. 21, 2011—the day after a Congressional committee sent a letter to the Energy Department inquiring about its loan guarantee program and the status of conditional commitments, including three involving First Solar.

Polizzotto agreed to settle the SEC's charges without admitting or denying the findings.  In addition to paying a $50,000 penalty, he agreed to cease and desist from causing any violations and any future violations of Regulation FD and the Securities and Exchange Act.

Compliance Lessons Learned

The SEC stated that it has determined not to bring an enforcement action against First Solar due to the company's “extraordinary cooperation with the investigation, among several other factors.” Specifically, prior to Polizzotto's selective disclosure, First Solar “cultivated an environment of compliance through the use of a disclosure committee that focused on compliance with Regulation FD.” 

When First Solar discovered Polizzotto's selective disclosure, the company “promptly issued a press release the next morning before the market opened,” the SEC stated. First Solar then immediately self-reported the misconduct to the SEC. 

First Solar also undertook “remedial measures to address the improper conduct,” the SEC stated, such as conducting additional Regulation FD training for employees responsible for public disclosure.