MOVING forward on mandatory XBRL, issuing new guidance for corporate website disclosures, and keeping an eye on the e-proxy process are among the key priorities for the US Securities and Exchange Commission this year.
In a speech Wednesday in San Diego, John White, the SEC’s Director of the Division of Corporation Finance, provided an update on his division’s corporate reporting agenda for the coming year. His speech covers a lot of ground, but since our focus here is on online corporate reporting, I am only going to highlight the parts of his speech that touch on the Web.
XBRL: Advisory Committee to Vote Feb. 11
As we reported last week, the 17-member Advisory Committee on Improvement to Financial Reporting (CIFiR), appointed last year to recommend ways to simplify corporate disclosure, has recommended in a draft report that the SEC make XBRL mandatory for all companies on a graduated basis starting with the 500 largest companies.
Although CIFiR was not scheduled to issue final recommendations until August, White revealed yesterday that the committee will meet on February 11 to vote on its XBRL recommendations.
At the same time, the SEC staff have been working at the request of SEC Chairman Chris Cox on recommendations that could see a proposed XBRL rule go to the full commission as early as April, with a final rule potentially being approved later in the year.
Much hinges on the successful review and testing of the US GAAP taxonomy that was made public in December. The comment period is due to close on April 4, and the SEC’s new Office of Interactive Disclosure has urged companies and others to provide their input.
White said his division stands ready “to undertake further rulemaking whenever the technology is ready” adding that “that time is fast approaching.”
Guidance for Corporate Websites
The SEC last issued interpretive guidance on the use of corporate websites for disclosure in 2000. In its draft recommendations, CIFiR has highlighted the need for new guidance given the many technological advancements that have occurred on the Web in the interim.
White said the issue is something the SEC staff have been “thinking about pretty seriously for some time now” but he did not provide an estimate of the timing of any new guidance.
“Consider how investors receive financial data today as compared to seven years ago — blast emails, webcasts of meetings, blogs, RSS feeds, electronic shareholder forums, podcasts, XBRL, electronic proxy solicitation. Consider also how technology can make it easier and more efficient for investors to find the financial data and analysis they are looking for,” said White.
He said issues that the SEC might address include the treatment of hyperlinked information on a company’s website, liability for disclosures, Regulation FD, and public availability of information.
His mention of Regulation FD and public availability of information is likely to crank up the PR wire service industry’s lobby machine. They stand to lose a big chunk of business if the SEC finds that corporate websites, email and RSS feeds can provide a suitable alternative to the services they provide. We have written much more on this topic in the past.
E-proxy: Paying Attention
Again, something we’ve written about a lot lately. White’s most relevant remarks on the topic are contained in this paragraph:
Although this rulemaking is complete, we’ll continue to monitor how the revised model is working so that we can make any changes necessary next year to smooth its use. In terms of what we’ve seen so far, we’ve heard from some that companies are still waiting to decide whether to use the voluntary model themselves this year. Although we’ve heard that the companies that have used e-proxy have seen significant savings, we’ve also heard that the retail vote goes down under e-proxy, so that may be one of the reasons that companies are being a bit cautious about using the model. On this point I’ll just say that we’re paying attention and this type of information is really helpful to us. So keep sharing your experiences with us — good and bad.”
We plan to do just that, but at this stage most of it will be about the bad. There’s really not a lot of good in e-proxy yet to write about.
White mentioned the SEC’s new rules for shareholder forums only fleetingly, saying that in combination with the e-proxy rules they were part of the SEC’s moves to embrace technology. He said that, “hopefully”, they will “increase shareholders’ and companies ability to communicate with each other effectively.”
By the way, the final rule release for Shareholder Forums (PDF 734 KB) has now been posted on the SEC’s website. Just 35 pages, which is small by SEC standards, but still very complicated for rules that impact the entire shareholder population.
Hopefully, someone in the Office of Investor Education and Advocacy is right now working on a nice Do’s-and-Don’ts list for the average retail shareholder who might feel the need to mouth off about something on a forum.
P.S. I forgot to mention that John White also said the Division of Corporation Finance will be updating and improving the organization of its website. That qualifies as a “Web initiative,” too.
P.P.S. Yes, I’d love to write about what regulators in other countries are doing related to the Web, but most follow the SEC’s lead. I’m sorry, no, those AIM rule 26 requirements are not worth writing about, beyond to say that they’re misguided, and the feeding frenzy by the website builders has been sickening to watch.