The regulation sought to stamp out selective disclosure, in which some investors (often large institutional investors) received market moving information before others (often smaller, individual investors).

Regulation FD changed fundamentally how companies communicate with investors, by bringing better transparency and more frequent and timely communications, perhaps more than any other regulation in the history of the SEC.

Before the 1990s, most individual investors followed the progress of their stock holdings by receiving phone calls from their broker, by reading annual or quarterly reports mailed to them by the company, by reading news in newspapers or financial publications, or by calling the company with questions. Most investors relied primarily upon full service brokers, such as Merrill Lynch, for trading advice.

During the 1990s, Internet usage became widespread and online discount brokers such as Charles Schwab, E-Trade and Ameritrade allowed individual investors to trade stocks online at the push of a button. At the same time, these investors began using the Internet to research stocks and make timely, more informed trading decisions. The Internet placed a plethora of rich research information into the hands of investors, who became more empowered than ever to make their own informed investing decisions. As these investors learned the joys of real-time stock quotes and near-real-time access to press releases, they began to demand even more access.

By 1999, individual investors became more aware of quarterly analyst conference calls, where a company's management would disclose the results of the quarter and answer analyst questions about the company's past performance and future prospects. At the time, most companies did not allow small investors to attend their calls.