The Securities and Exchange Commission voted on January 15, 2003 to adopt Regulation G. The new regulation will apply whenever a company publicly discloses or releases material information that includes a "non-GAAP financial measure."

A non-GAAP financial measure is defined as a numerical measure of a company's financial performance that includes or excludes amounts normally reflected in comparable measures calculated and presented in accordance with generally accepted accounting principles (GAAP) in the statement of income, balance sheet or cash flows.

Most notably, the SEC's definition would encompass metrics commonly known as "pro forma earnings." Regulation G prohibits use of non-GAAP measures that contain untrue statements or omissions of material facts. It also requires reconciliations with comparable GAAP measures, with limited exceptions for foreign issuers.

At the same time, the SEC also voted to adopt:

• Regulations that will require companies to promptly disclose information about material changes in their financial condition or operation and to furnish to the Commission any releases or announcements about these changes, if and when the information is released to the public. This requirement does not apply to information released through oral statements, telephone calls, webcasts or broadcasts made within 48 hours of a related Form 8-K, provided the information is broadly available to the public and posted on the company's Web site.

• Rules restricting insider trading during pension fund blackout periods. These rules apply to trading by directors and executive officers as well as companies. They require a company to notify its directors and executive officers, as well as the Commission, of an impending blackout period on a timely basis.

The SEC is pushing to implement the many rules required by the Sarbanes-Oxley Act before the legislative deadline of January 26, 2003. Outgoing SEC Chairman Harvey Pitt said this week and next week could be "the busiest two weeks of rule-making in this agency's history."