JUST popping in because the U.S. National Investor Relations Institute upset my sensibilities today when it reiterated the following policy to members about electronic communications:
NIRI advises companies not to participate in chat rooms. Companies should monitor the Internet for information about the company but should not respond to market rumors or participate in “chat rooms” about the company. Such responses may, under certain circumstances, be considered a form of selective disclosure. Company policies should be updated to address employees’ use of technology with regard to disclosure issues, including participation in Internet chat rooms and use of e-mail.
In other words, don’t talk to investors in chat rooms, period.
Not even if you identify yourself and don’t selectively disclose anything. Reaching out and talking to people, being accessible and building and maintaining relations with people online is taboo at NIRI.
The truth is there’s much greater risk that IROs and executives will selectively disclose information in one-on-ones and private group meetings with analysts and investors. Why aren’t those banned?
And how do we define a “chat room?” Does it include the SEC’s shareholder chat room proposal? What about blogs and their comment threads? Aren’t those chat rooms? Yes, they are.
A chat room is anywhere on the web where people communicate with one another. So this is like saying that Investor Relations shouldn’t talk to people on the Web — the single biggest, lowest cost, most international communication channel a company has.
This NIRI policy is obsolete and, quite frankly, a cop-out. There’s nothing to prevent company officers participating in online discussions if they do so responsibly and with good intentions. The same rules apply online as they do off-line.
Of course, if you’re not confident or competent enough to act responsibly in your communications with investors, online or off, then by all means stay away. But NIRI is not helping its responsible, competent members by reinforcing such myopic, comfortable, old-school, knee-jerk thinking.