INVESTOR relations website developer Shareholder.com, a subsidiary of Nasdaq Stock Market Inc. (NASDAQ:NDAQ), appears to be finally getting the message that snooping on the activities of investors on company websites is unethical — and even illegal.
At some point in recent weeks, Shareholder.com has changed the marketing information on its website to remove many references to the website tracking tools it has deployed on more than 100 companies’ websites. These use cookies to track and compile detailed reports on identified investors’ and analysts’ personal activity on companies’ investor relations websites.
The most noticeable change of positioning can be seen on the promotion for Shareholder.com’s online annual report and proxy statement product. In a prior iteration (shown below), the company trumpeted its user tracking tools as the main reason companies should buy the product.
This is the promotion for Shareholder.com’s Dynamic Annual Report service as it appeared on the company’s website on January 14, 2007.
“Get new intelligence about shareholders as they research your company,” they exclaimed, adding th
at their online reports would help companies “identify investors and their interests, including most view pages, keyword searches, and email distribution.”
They even provided access to a screenshot of an “individual website activity” report for an analyst, Bradley Flynn of Morgan Stanley, that showed when and what pages and resources he accessed on an example company’s website. See that screenshot in a new window.
A new tune
But now when you visit the page, they’re singing a completely new tune. They’re promising “complete anonymity for your shareholders.” Shareholder.com is still offering “detailed traffic and keyword reporting,” but I’ve never had a problem with that because the data is anonymous.
The company is now offering "complete anonymity for your shareholders."
Culture change needed
However, I’m not entirely satisfied that Shareholder.com has backed away completely from individual-level tracking. I see signs that they might still be doing it. This page on their website, for example, says their Investor & Peer Intelligence suite can help with “identifying investor interest by mining shareholder communication activity from the IR website, webcast events and other touch points.”
But even that is toned down substantially from past versions.
So what does this mean for my opinion of Shareholder.com’s products and services, and the company itself? Nothing changes my opinion until there’s clear evidence of a culture change at the firm.
I find it hard to forget that this company saw nothing wrong in spying on investors’ website activity without their consent or knowledge. And I don’t understand why they waited until they had exposed their clients to potential embarrassment and possible SEC action before changing their minds. See my post on Applied Micro Circuits Corporation (NASDAQ: AMCC), for example.
The fact is, they probably wouldn’t have backed away from breaching investors’ anonymity on online annual reports and proxy statements if they hadn’t been forced to do so due to the SEC’s new rules for online proxy materials.
In a profession where a good internal compass is often all that stands between a company and severe damage to its credibility and reputation, Shareholder.com has demonstrated a lack of good instincts and mystifying stubbornness against facing up to their mistakes.
So forgive me if I’m not willing to give them a big hug just yet.
Dominic Jones (bio) created IR Web Report in 2001. He is a consultant to leading public companies and investor relations service providers worldwide. You can contact him via the contacts page.
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