When America Online Inc. and Wal-Mart Stores Inc. announced a new venture Thursday to bring the Internet to Wal-Mart's millions of customers in small-town America, Wall Street shrugged it off.

Old News.

The story of the alliance between the nation's biggest retailer and the biggest Internet service had been leaking out for at least a week, pumping up the stocks of both companies.

Wal-Mart's stock was up $10 a share and AOL's was up $13 by last Monday when speculation about a possible liaison between the two firms was replaced by the first credible, published report on their plans.

Credit for the scoop went not to any news organization but to analyst Richard L. Church, who follows Wal-Mart for Salomon Smith Barney Inc., the big investment firm owned by Citigroup Inc.

The price of both stocks peaked on the day Church's report was made public, but their trading volumes hit their highs on Dec. 3, which was the heaviest trading day for either issue in more than six weeks. Internet investment discussion groups picked up on the heavy trading in AOL that Friday, producing a lot of speculation, but no hard information.

It's hard to look at the trading in AOL and Wal-Mart shares and not suspect that somehow, somebody found out in advance what they were up to. By the time their new Internet venture was actually announced, any money to be made on the stocks had long since been captured.

And look at how much money was made: The $10 jump in the price of Wal-Mart's 4.45 billion shares generated $44.5 billion; the $13 gain in AOL's stock price boosted the market value of the 2.24 billion AOL shares by $29 billion.

Patterns like this leave many individual investors fuming in frustration and contribute to the impression that stock markets are unfair, because the big boys, the insiders, always seem to get important news first.

That's why Securities and Exchange Commission Chairman Arthur Levitt is off on another of his crusades, this time against selective disclosure of corporate information.

Levitt is the most activist chairman the SEC has had in a couple of decades and, probably not by coincidence, has more hands-on experience in the markets than anyone who has served on the SEC in many years. He has taken on egregious practices before, such as blowing the whistle on "creative accounting" and stomping out the "pay-to-play" practices of the municipal bond industry.

People in the municipal bond game knew they had to give campaign contributions to local politicians to get bond-underwriting assignments, but until Levitt went public over the issue, they all simply played the game and tried to use it to their advantage.

The same thing is true on the "selective disclosure" front. Everyone knows that some companies tell some investors more about their business than they tell the general public. When big institutional investors drop in on company officials for private meetings, they find out things that aren't in the press releases and SEC filings. Analysts working for brokerage firms expect to get a "heads up" when some big news is coming. They wheedle out crucial tidbits of data that would not be disclosed to a mere shareholder who happened to call with a question. Analysts demand and often get "guidance" from companies they are writing about.

The SEC has the power to sanction or fine companies that selectively disclose "material information" (what, exactly, that means is another big question) and often brings cases to signal its concerns. Last week the commission attacked the issue more directly, issuing proposed disclosure rules. The basic principle: If something important enough to move a company's stock is disclosed to analysts or investors, it should immediately be announced to the public.

Levitt's crackdown on selective disclosure is not the same as the commission's regular policing of the markets for people who are trading on illegal inside information. It's not about tipping off your brother-in-law to a takeover or buying your company's stock because you learned from somebody in the accounting department that profits were really growing. It's more subtle -- though often more deliberate.

With some companies, there seems to be a regular pattern of major developments showing up first in the reports of analysts who work for firms that handle the company's investment-banking work. Others have a way of making sure that positive events are leaked to the Wall Street Journal or some specialty publication, which gives much bigger play to the exclusive leak than it would to an ordinary press release.

Among Levitt's top targets are the analysts meetings where top executives discuss corporate developments with investment decision makers and the quarterly conference calls during which they field phoned-in questions about details of the financial reports that are issued to the public.

Traditionally analysts meetings and conference calls have been closed to the media and the public, but that is changing very rapidly, said Louis M. Thompson Jr., president of the National Investor Relations Institute, the McLean-based organization of corporate officials who deal with investors.

A survey done for the institute last June found that 42 percent of corporations have opened their conference calls to the media, up from just 14 percent a year earlier. Another 13 percent of the companies are putting their conference calls on the Internet, a idea so new that a year earlier no one was doing it.

Corporate investor relations officers generally support the SEC's move against selective disclosure. The rules will help keep corporate executives from going off the reservation when they meet with investors and, Thompson added, help companies resist pressure from analysts for information that hasn't been disclosed to the public.

The investor relations institute is urging the SEC to create a "safe harbor" for companies that open their conference calls to the media and investors and announce them in advance so there is plenty of opportunity for public participation. Anything said in such a public forum would be considered full disclosure, just as if the company had issued a press release or made an SEC filing.

That might help assuage the concerns of securities lawyers who advise corporations on what they should disclose and how they should disclose it. "This is a difficult area to counsel in," said Karl Groskaufmanis, a securities law specialist in the Washington office of Fried, Frank, Harris, Shriver & Jacobson.

A whole system of informal communications between corporations and investors has evolved outside the regulatory structure that spells out what must be disclosed in formal SEC reports, he said.

Once the government writes rules, regulators may start second-guessing corporations that have made a good-faith effort to comply, Groskaufmanis said. That could shut down communications channels that now carry important information to the market.

The strongest resistance to the SEC's attack on selective disclosure is coming, not surprisingly, from Wall Street, lead by its lobbying group, the Securities Industry Association.

Among the industry arguments is the claim that analysts are really just the eyes and ears of small investors, so there's nothing wrong with giving them corporate secrets or private briefings.

There may be some investors who will buy that argument. There may be investors naive enough to believe that Wall Street is run by self-sacrificing emissaries of the stockholding investors, without regard to brokerage firm profits or the brokers' own bonuses.

But it's a whole lot more likely that the people who are defending authorized leaks, informal guidance and insiders-only analysts briefings are the ones who now benefit from selective disclosure. They're the ones who bought Wal-Mart and AOL stock well before the first research report on their Internet venture was issued, when all that individual investors could do was go into the chat rooms and ask "what's with all this trading in AOL?"

Somebody knew. Somebody always knows. And those somebodies want to keep on knowing things that other people don't. That's how they make their money.

CAPTION: Who Knew What When? (This graphic was not available)