BROADRIDGE Financial Solutions Inc. (NYSE:BR) last night launched The Investor Network, a social network and discussion forum open only to participation by investors whose holdings in companies can be verified via their brokerage accounts.
Details of the TheInvestorNetwork.com, which caters to a potential audience of up to 90 million investors in the United States and Canada, were first revealed in August by Broadridge’s CEO Rich Daly, who said he had discussed the concept with US Securities and Exchange Commission (SEC) Chairman Christopher Cox.
While anyone can view information on the site, to contribute investors must first provide the online account ID and password they use to access their brokerage account, and agree to a long and detailed disclaimer that includes a number of references to SEC regulations.
Once verified, each investor is given their own page under a pseudonym that shows which companies’ stocks they hold in their portfolio, along with an indication of how many shares they own. They can then post comments in discussions about those companies, as well as companies whose securities they do not own.
See the screenshot below for an example of user profile page:
Each company included in the network has its own page which includes a stock chart, news headlines and a list of postings by validated investors. The site, which was developed for Broadridge by Telligent Systems Inc., also features many RSS feeds, tag clouds, and exclusive articles by well-known financial journalists.
The heavy legal restrictions on what investors and company reps can say on such a forum is made clear on the site via a disclaimer at the bottom of each page which reads: “If you desire to post comments within sixty (60) days of a company’s shareholders’ meeting, you should first consult the SEC’s proxy solicitation rules at http://www.sec.gov/rules/final/2008/34-57172.pdf.”
Frankly, I doubt many investors will be able to understand the SEC’s rules, which include language such as this:
Therefore, we are adding a new exemption to Rule 14a-2 to state explicitly that Rules 14a-3 through 14a-6 (other than Rule 14a-6(g)), Rule 14a-8, and Rules 14a-10 through 14a-15 do not apply to any solicitation in an electronic shareholder forum if all of the conditions to the exemption are satisfied. Rule 14a-2(b)(6) exempts from most of the proxy rules any solicitation by or on behalf of any person who does not seek directly or indirectly, either on its own or another’s behalf, the power to act as proxy for a shareholder and does not furnish or otherwise request, or act on behalf of a person who furnishes or requests, a form of revocation, abstention, consent, or authorization in an electronic shareholder forum that is established, maintained or operated by a company, shareholder, or a third party acting on a company’s or shareholder’s behalf.
Yeah, exactly! It’s absolute nonsense to people who just want to talk about their stocks, and hopefully also have a chance to make their voices heard by management and the board of directors. Hopefully, the SEC’s Office of Investor Education and Advocacy will do a plain English version of that rule release.
When he first disclosed details of Broadridge’s plans, CEO Daly said he wasn’t sure how Broadridge would make money on the new social network. He mentioned advertising and sponsorships by companies.
My advice to companies is to wait and see if the network gains traction with investors before agreeing to become a sponsor.
However, from what I’ve seen, I think Broadridge is offering something that serious investors will find quite attractive — if they can figure out all the disclaimers.
Disclosure: I own stock in Broadridge.