By Dominic Jones
THE U.S. Securities and Exchange Commission (SEC) is continuing to weigh whether to allow companies to use website and blog postings instead of news releases for investor disclosure.
Chairman Christopher Cox told a Reuters Regulation Summit in Washington that the dissemination requirements for Regulation Fair Disclosure (Reg. FD) that were passed more than six years ago have been overtaken by technology.
|SEC Chairman Christopher Cox…”accommodation for how world actually works”|
He said: “When Reg. FD went into place, some of the commissioners at the time raised this question. Of course, the use of the Internet is now much more widespread. Indeed, the way that press releases are now distributed is by the Internet.
“We’re going to continue to look at this issue and see whether or not some accommodation cannot be made for how the world actually works.” (listen to audio from Reuters)
Issue raised by Sun’s CEO
The question of companies being allowed to use adequately noticed website and blog postings was raised by Sun Microsystems CEO Jonathan Schwartz in a letter to Cox last October.
Schwartz, who is the only Fortune 500 CEO who blogs, asked the commission to consider changing the requirement that companies use SEC filings, news releases and open conference calls to distribute information. Reg. FD is designed to ensure that all investors have equal access to important information.
Chairman Cox responded in November by posting his reply on Schwartz’s blog, a move that drew widespread media and blog reaction. The chairman of the world’s most powerful securities regulator said the SEC supported the use of the Internet to inform investors and welcomed Schwartz’s offer to discuss the issue further.
Opposition from big news release services
News release services such as PR Newswire and Business Wire, which earn substantial revenues off the back of SEC and exchange rules, have been critical of the concept of adequately noticed website postings for disclosure.
Here at IR Web Report, we support the idea of websites and RSS being used for disclosure. If nothing else, the SEC should start a pilot program, possibly tied to its XBRL pilot, to test the effectiveness of website postings of scheduled disclosures such as quarterly earnings announcements.
The time and date of these disclosures could be announced and the actual releases distributed to interested investors via email and RSS, as well as posted on companies’ websites.
Cox reads blogs
Speaking at the Reuters event on Monday, Chairman Cox also revealed that he reads blogs to gauge public reaction to the SEC’s activities and rule making.
“Blogs are a great way to infer passion and depth of feeling,” he said. “They give you an early read on the … response you might expect.”
However, he said blogs were informal and “so irreverent” that he did not rely on them to steer formal SEC business.
Hmm, wonder who he was thinking about when he said that? Better irreverent than irrelevant, I guess.