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Opinion: ‘Selective disclosure’ game must end

Opinion: ‘Selective disclosure’ game must end
Disclosure Law legal concept

With all the consolidation underway in the RV industry, a new game has developed and that is to release important information selectively to the company’s favorite media outlets, rather than releasing it publicly to everyone.

We’re seeing this more and more. But such selective disclosure — or worse, nondisclosure — is not only unnecessary, it may very well be illegal and I’m hoping the practice ends quickly.

It happened last weekend with Thor Industries’ selective disclosure to RV Business regarding senior management changes to its Jayco subsidiary. The news, which materially impacts the profitability of Jayco, cannot be found anywhere other than RV Business.

The law firm of Morrison Forester, with locations in major cities all over the world, has published guidance as to how publicly traded companies should release information.

Under Regulation FD, publicly-traded companies must make the public disclosure simultaneously, in the case of intentional disclosures, or promptly afterward, in the case of unintentional disclosures, according to Morrison Forester.

Securities and Exchange Commission Regulation FD addresses the practice of “selective disclosure” of information and REQUIRES publicly traded companies to make public disclosure of certain items that could impact an investor’s decision to buy or sell a stock.

According to Morrison Forester, information is considered to be material if there is a “substantial likelihood that a reasonable shareholder would consider it important” in making an investment decision, or if the facts “would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.”

When the Securities Exchange Commission announced its final rule on selective disclosure and insider trading, which went into effect Oct. 23, 2000, the SEC noted, “While it is not possible to create an exhaustive list, the following items are some types of information or events that should be reviewed carefully to determine whether they are material:

  1. Earnings information
  2. Mergers, acquisitions, tender offers, joint ventures, or changes in assets
  3. New products or discoveries, or developments regarding customers or suppliers
  4. Changes in control or in management
  5. Change in auditors or auditor notification that the issuer may no longer rely on an auditor’s audit report
  6. Events regarding the issuer’s securities — e.g., defaults on senior securities, calls of securities for redemption, repurchase plans, stock splits or changes in dividends, changes to the rights of security holders, public or private sales of additional securities
  7. Bankruptcies or receiverships.

Winnebago Industries gets it. The company does a phenomenal job in providing fair access to information about its products, employees and company activities. In fact, every single press release prepared by the company is also available on its investor relations website.

Visit the website to see how the company makes sure its news is immediately available to anyone – investors, media, RV owners and anyone else interested in what’s going on at WGO.

Thor Industries, which now owns 13 manufacturing companies, provides a limited resource on the Thor investor relations website in that it announces its earnings and acquisitions. But, it generally ignores new products, changes to senior management at its subsidiary companies, and information about “developments regarding customers or suppliers.”

I guess I’d consider a senior management change as involving anyone directly responsible for sales and production of the RVs, and management of any operational entity, including vice presidents and general managers. I’d also consider a development regarding a supplier to include the now-frequent “exclusive” partnerships being forged.

Forest River, which has 11 operating entities, provides no press releases of any kind on its website. Each subsidiary company simply chooses which media outlets it wants to grace with its corporate communications. That, my friends, is called “selective disclosure.”

Some will argue that term applies to information being made to select specific individuals. My position is that the information needs to be provided to EVERYONE simultaneously.

With three companies controlling nearly 90 percent of all manufacturing in the RV industry, it is absolutely essential that ALL information released by Thor Industries and Forest River — and its subsidiaries — be disclosed simultaneously to whomever wants it without hand-selecting their favorite media outlets.

The same holds true for Keystone Automotive, which controls more than 80 percent of the RV aftermarket. The Keystone Automotive news page provides no financial information, nor any information about senior management or its branded products. It’s “news” page is nothing more than stories published by other media outlets copied and pasted onto the Keystone website.

Yes, Keystone Automotive is itself controlled by LKQ, but even LKQ’s news page provides nothing other than financial information about its company and frequent announcements that it’s staff will make presentations at various investor conferences.

There is no mention of major personnel announcements and certainly no information about “developments regarding customers or suppliers.”

Surprisingly, Camping World, which is now a publicly traded company, has done a good job since it started trading in October of making press releases and company information available on the Camping World investor relations page.

The internet is an amazing resource and it takes virtually nothing and costs little to make all company announcements available 24/7 to whomever wants to read them.

The days of the “Good ‘Ol Boys Club,” where publicly-traded — or controlled — RV companies maintain high school-like cliques of their favorite media pals needs to end before the Securities and Exchange Commission forces a change.

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About Greg Gerber

Greg Gerber is the editor and founder of RV Daily Report. A native of Madison, Wis., he moved to Phoenix in 2009 to escape the endless winters and wicked humidity of the six-week "summer" season. He's a DODO -- Dad of Daughter's Only -- who would crawl across the desert on his hands and knees for an In-N-Out Double Double. He has visited every state except Hawaii and is anxiously waiting for some RV company to host a conference in the Aloha State.

3 comments

  1. Well researched and well said.

  2. More hubris by the RV industry, IMO.

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