American securities markets are the strongest in the world due in large part to the disclosure system ushered in during the 1930s. Compelled revelation of developments by corporate management and of material, nonpublic information by investors are staples of that protocol. Yet, the ease of mass communication via social media may have already mortally wounded the traditional process, which remains tied to filings shared days after an event, or weeks after the conclusion of a quarter. This article examines examples—both predictable and sublime—of the fading utility of those notorious SEC paper filings.

Traditional Approach

News that is "material" and "nonpublic" was expressly made subject to public disclosure over 60 years ago. In re Cady, Roberts, 40 S.E.C. 907 (1961). Through similar administrative case law the SEC set the standard for evaluating "nonpublic" news about 10 years later.

Specifically, the Faberge test examined 1) whether material information was imparted via mass distribution, and 2) whether the public had time to digest the news (e.g., 24-48 hours). In re Faberge, Inc., 45 S.E.C. 249, 255 (1973). The Faberge standard worked for varied reasons. Apart from its clarity, the test admirably distributed accountability among both the purveyors and recipients of sensitive corporate information.