Cephalon's upside earnings surprise last week illustrates the dilemmas caused by the SEC's Regulation FD, put in place last October to curb selective disclosure of material information.

The company elected to wait until its third quarter earnings conference call to disclose that it had seen a higher than expected run rate of sales for its narcolepsy drug Provigil modafinil, with the final numbers coming in at $53.7 million (see Ebb & Flow, A12). By the time CEPH became aware of the sales trends in late October, it had already scheduled its earnings call for Nov. 5. The company chose not to pre-announce to avoid speculation that negative news was on the horizon: