We will be in earnings season soon, good time to play stocks that will be reporting on “anticipation” that they will beat the street. Whether they do or not does not matter because the run up prior to earnings can be significant. However, if you are in an earnings play and the company warns…well you ain’t a happy camper. So my question is about the “quiet period”. You have mentioned this before but your comments have been vague. Do you have a definition of what quiet period is and the exact time frame that it occurs? How many business days? Calendar days? Is it mandated by the SEC?

The reason we have been somewhat vague on the specifics in the past is because the SEC regulations that cover disclosures when a registration (e.g., earnings information) has been made are do not set out specific times and days. The term “quiet period” — also referred to as the “waiting period” — is not actually defined under the federal securities laws. It generally refers to the period that begins when a company files a registration statement with the SEC and lasts until the SEC’s staff have declared the registration statement “effective.” During this period, the federal securities laws limit what information a company and related parties can release to the public. The regulations do not set out when the SEC has to declare the statement effective. Thus there is not one day you can point to even if you know the date the company files the registration information. That makes it particularly hard to determine when you should bail on an earnings run if you are concerned of an earnings warning (something that is always a problem in this recovering economy).