Why This Matters
Regulatory compliance isn't just a box-checking exercise—it's the foundation of trust between your company and its investors. When you understand why these regulations exist, you'll recognize that they all serve interconnected purposes: protecting investors from fraud, ensuring market fairness, and promoting corporate accountability. Every disclosure requirement, filing deadline, and governance standard traces back to these core principles, often born from specific market failures or scandals that demanded legislative response.
As an IR professional, you're being tested on your ability to navigate overlapping regulatory frameworks while maintaining transparent, timely, and accurate communications. The regulations covered here span disclosure timing, financial accuracy, ethical conduct, and stakeholder protection. Don't just memorize which form is due when—understand what each regulation is designed to prevent and how they work together to create a functioning capital market.
Foundational Disclosure Requirements
These regulations establish the baseline rules for what public companies must tell investors and when. The underlying principle is simple: informed investors make better decisions, and better decisions create more efficient markets.
Securities Exchange Act of 1934
- Governs secondary market trading—this is the law that created the SEC and established ongoing reporting requirements for public companies
- Continuous disclosure mandate requires companies to file regular reports, ensuring investors always have access to current financial information
- Anti-fraud provisions (particularly Section 10b-5) form the legal basis for most securities fraud cases and enforcement actions
Regulation Fair Disclosure (Reg FD)
- Prohibits selective disclosure of material nonpublic information—if you tell one analyst, you must tell everyone simultaneously
- Levels the playing field between institutional and retail investors by ensuring equal access to market-moving information
- Enacted in 2000 after concerns that companies were tipping off favored analysts before public announcements
- Materiality standard—information is material if a reasonable investor would consider it important in making an investment decision
- Timing is critical: material information must be disclosed promptly to avoid creating an unfair trading advantage
- Context determines materiality—the same fact may be material for one company and immaterial for another depending on circumstances
Compare: Reg FD vs. Material Disclosure Guidelines—both address what gets disclosed, but Reg FD focuses on who receives it (everyone simultaneously) while materiality guidelines focus on whether it needs disclosure at all. FRQ tip: If asked about selective disclosure to analysts, Reg FD is your answer; if asked about determining what to disclose, focus on materiality standards.
Financial Reporting Framework
Accurate financial reporting is the currency of investor trust. These regulations ensure that the numbers companies report are reliable, comparable, and audited by independent parties.
Sarbanes-Oxley Act (SOX)
- Section 302 certification requires CEO and CFO to personally certify the accuracy of financial statements—putting executives on the hook for misrepresentations
- Section 404 internal controls mandate documentation and testing of controls over financial reporting, with external auditor attestation
- Born from Enron and WorldCom scandals (2002), SOX represents the most significant corporate governance reform since the 1930s
GAAP and IFRS Reporting Standards
- GAAP (Generally Accepted Accounting Principles) is the mandatory framework for U.S. public company reporting, emphasizing rules-based guidance
- IFRS (International Financial Reporting Standards) is principles-based and used in over 140 countries—critical for multinational companies and foreign investors
- Reconciliation requirements may apply when companies report under both standards or when foreign private issuers file with the SEC
Financial Reporting Accuracy and Transparency
- Free from material misstatement—financial statements must fairly present the company's position, whether errors are intentional or not
- Regular audits by independent firms provide third-party verification and are required for all SEC registrants
- Clear communication means avoiding jargon and ensuring non-expert investors can understand financial results
Compare: SOX vs. GAAP/IFRS—SOX governs how financial reporting is controlled and certified (process), while GAAP/IFRS govern what the financial statements contain (substance). Both are essential: you can have perfect GAAP compliance but still violate SOX if internal controls are inadequate.
Filing Deadlines and Periodic Reports
Missing a deadline isn't just embarrassing—it can trigger SEC enforcement, damage credibility, and spook investors. These forms create a rhythm of disclosure that keeps the market continuously informed.
SEC Filing Deadlines (10-K, 10-Q, 8-K)
- 10-K (annual report): due 60 days after fiscal year-end for large accelerated filers, 75 days for accelerated filers, 90 days for non-accelerated filers
- 10-Q (quarterly report): due 40 days after quarter-end for accelerated filers, 45 days for non-accelerated filers—covers three of four quarters
- 8-K (current report): due within four business days of triggering events like executive departures, material agreements, or bankruptcy
Proxy Statement and Annual Meeting Regulations
- DEF 14A proxy statement must be filed and distributed to shareholders before annual meetings, typically 20+ days in advance
- Executive compensation disclosure (including the CEO pay ratio required by Dodd-Frank) gives shareholders insight into how leaders are rewarded
- Shareholder proposal rules allow investors to submit governance proposals for inclusion in the proxy, subject to eligibility requirements
Compare: 10-K vs. Proxy Statement—both are annual documents, but the 10-K focuses on financial performance and business operations while the proxy focuses on governance, compensation, and shareholder voting matters. Know which document contains what: executive comp details live in the proxy, not the 10-K.
Corporate Governance and Ethics
Strong governance protects shareholders from management self-dealing and builds long-term trust. These requirements address the human element—ensuring the people running companies act in shareholders' best interests.
Corporate Governance Best Practices
- Board independence is paramount—NYSE and NASDAQ require majority independent boards, with fully independent audit, compensation, and nominating committees
- Accountability mechanisms include regular board evaluations, shareholder engagement, and transparent succession planning
- Ethical culture starts at the top: codes of conduct, compliance training, and tone from leadership all contribute to governance quality
Insider Trading Policies and Procedures
- Trading windows and blackout periods restrict when insiders can buy or sell company stock, typically prohibiting trades around earnings releases
- Section 16 reporting requires directors, officers, and 10%+ shareholders to file Forms 3, 4, and 5 disclosing their transactions
- 10b5-1 plans allow insiders to establish predetermined trading schedules, providing an affirmative defense against insider trading claims
Conflict of Interest Disclosures
- Related party transactions must be disclosed in financial statements and proxy materials when executives or directors have personal interests in company dealings
- Board approval requirements typically mandate that disinterested directors approve any transaction involving a potential conflict
- Ongoing monitoring ensures that new conflicts are identified and addressed promptly, not just at hiring or election
Compare: Insider Trading Policies vs. Conflict of Interest Disclosures—both address situations where personal interests might compromise fiduciary duties, but insider trading focuses specifically on securities transactions while conflict of interest rules cover any business dealing where personal and company interests diverge.
Whistleblower and Anti-Corruption Protections
These regulations protect those who report wrongdoing and prevent companies from gaining unfair advantages through bribery. The principle: markets only work when bad actors face consequences and good-faith reporters are protected.
Whistleblower Protection Policies
- Dodd-Frank whistleblower program offers financial rewards (10-30% of sanctions over $$1 million) for tips leading to successful SEC enforcement
- Anti-retaliation provisions prohibit termination, demotion, or harassment of employees who report securities violations
- Internal reporting channels should be clearly communicated so employees can raise concerns before going to regulators
Foreign Corrupt Practices Act (FCPA)
- Anti-bribery provisions prohibit payments to foreign government officials to obtain or retain business—applies to U.S. companies and foreign issuers
- Books and records requirements mandate accurate documentation of all transactions, preventing hidden slush funds or off-books payments
- Strict liability risk means companies can be liable for actions of subsidiaries, agents, and joint venture partners, requiring robust due diligence
Compare: Whistleblower Protections vs. FCPA—both aim to prevent corporate misconduct, but whistleblower rules protect the people who report problems while FCPA directly prohibits specific corrupt conduct. A whistleblower might report an FCPA violation, triggering both frameworks simultaneously.
Emerging and Expanded Disclosure Requirements
These represent the evolution of securities regulation toward broader stakeholder accountability. The trend is clear: investors increasingly demand information beyond traditional financial metrics.
Dodd-Frank Act Requirements
- Say-on-pay votes give shareholders a non-binding vote on executive compensation at least every three years
- CEO pay ratio disclosure requires companies to report the ratio of CEO compensation to median employee pay—a politically charged but now-standard metric
- Clawback policies (as amended by SEC rules in 2023) require recovery of erroneously awarded incentive compensation following restatements
Environmental, Social, and Governance (ESG) Reporting
- Climate disclosure rules (SEC's 2024 requirements) mandate reporting of material climate risks, greenhouse gas emissions, and climate-related financial impacts
- No single standard yet dominates—companies navigate SASB, GRI, TCFD, and other frameworks while awaiting regulatory harmonization
- Investor demand drives adoption: institutional investors increasingly use ESG metrics in allocation decisions, making voluntary disclosure strategically important
Compare: Dodd-Frank vs. ESG Reporting—Dodd-Frank requirements are mandatory and specific (exact ratios, defined votes), while ESG reporting remains largely voluntary and flexible (multiple frameworks, materiality-based). However, the SEC's climate rules are pushing ESG toward the mandatory side of this spectrum.
Quick Reference Table
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| Disclosure Timing | Reg FD, 8-K (4 business days), 10-Q (40-45 days), 10-K (60-90 days) |
| Financial Accuracy | SOX Section 302/404, GAAP/IFRS, Independent Audits |
| Anti-Fraud | Securities Exchange Act Section 10b-5, Insider Trading Policies |
| Corporate Governance | Board Independence, Proxy Statements, Conflict of Interest Disclosures |
| Executive Accountability | SOX Certification, Say-on-Pay, Clawback Policies, CEO Pay Ratio |
| Anti-Corruption | FCPA (bribery + books/records), Whistleblower Protections |
| Stakeholder Transparency | ESG Reporting, Material Information Guidelines |
| International Operations | FCPA, IFRS Reconciliation |
Self-Check Questions
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Which two regulations both address the timing of disclosure but focus on different aspects—one on simultaneous release and one on filing deadlines?
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If a company's CFO discovers that last quarter's revenue was materially overstated, which SOX provision requires them to take personal responsibility, and what Dodd-Frank mechanism might affect their bonus?
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Compare and contrast the 10-K annual report and the DEF 14A proxy statement: what types of information appear in each, and why are they filed separately?
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An IR professional learns that a board member's spouse owns a company that just signed a major supply contract with the firm. Which compliance area is implicated, and where must this be disclosed?
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How do whistleblower protections and FCPA compliance work together? Describe a scenario where both frameworks would be triggered by the same underlying conduct.