Friday, November 10, 2006
SEC chief posts to CEO blog
Cox reveals he is open to discussing material disclosure via the web
November 7, 2006 - CORRECTED NOVEMBER 8
NEW YORK -- In a provocative move, SEC Chairman Christopher Cox used a corporate blog to acknowledge a request to recognize company web sites as appropriate venues for the disclosure of material business information.
In a November 3 comment posted on the blog of Sun Microsystems CEO Jonathan Schwartz, Cox said he was open to discussing whether web postings would constitute full and fair disclosure under securities regulations, but still had major reservations.
'The SEC encourages the use of web sites as a source of information to the market and investors, and we welcome your offer to further discuss with us your views in this area,' Cox wrote to Schwartz, who has made this issue one of his causes from his perch at the Santa Clara network computing company.
While supporting the concept, Cox said he had concerns over whether companies would be able to employ the web in a way that assures the company's disclosure provides 'non-exclusionary access' and meets the 'widespread dissemination' requirement of Regulation FD.
Cox, a recognized technophile, noted that since Regulation FD was adopted in 2000, there have been significant advances in technology with increased usage of the internet by businesses, consumers, investors and government agencies. He also said the SEC is looking for ways to 'tap the power of technology to enhance investor access to information.'
In musings on his blog throughout the fall, Schwartz, who is the most prominent US corporate blogger, has said Sun's web site is as good a place to distribute important company news as an established newswire - or better. He formally asked the SEC to consider online communications as satisfying Regulation FD in a September 25 letter.
Currently, the SEC considers a variety of mechanisms as satisfying rules including a press release, but also public conference calls, webcasts with adequate notification and filings on form 8K. Many still view the press release via an established newswire as the single best way to ensure that new material information is available to the investing public.
The concept of a company using its own web site to release important financial information is a controversial one. For one, hackers could post fake information to blogs. Others note that companies themselves could manipulate material after posting it. It also simply up-ends the established order. 'Can a company bypass the mainstream channels and be its own news service?' asks Debbie Weil, corporate and CEO blogging consultant. 'It seems scary and different.'
Venues like newswires or conference calls by recognizable company figures offer built-in content validation. It also may be simpler for investors to have just a few, focused channels for key business information rather than the free-for-all of the web.
'We view blogs as one piece of the communications puzzle,' says Cathy Baron Tamraz, president and CEO of Business Wire. 'But we don't think online postings are a legitimate substitute for a secure, credible disclosure platform.'
She notes her wire service offers a multi-channel distribution platform plus access to key audiences. 'It's not just technology, but the experience and know-how in dealing with market-moving information,' Tamraz says.
Above all, if web postings were deemed full disclosure, the public would have to go searching for news, and those individuals who stumbled across it first would have an advantage over everyone else.
Chairman Cox's enthusiasm for blogs may be dampened after his Friday afternoon posting on Sun's site stayed mostly a secret for at least two days; the big news didn't spread until it was picked up by the media on Sunday.
Schwartz's blog: blogs.sun.com/jonathan
by Anna Snider
November 7, 2006 - CORRECTED NOVEMBER 8
NEW YORK -- In a provocative move, SEC Chairman Christopher Cox used a corporate blog to acknowledge a request to recognize company web sites as appropriate venues for the disclosure of material business information.
In a November 3 comment posted on the blog of Sun Microsystems CEO Jonathan Schwartz, Cox said he was open to discussing whether web postings would constitute full and fair disclosure under securities regulations, but still had major reservations.
'The SEC encourages the use of web sites as a source of information to the market and investors, and we welcome your offer to further discuss with us your views in this area,' Cox wrote to Schwartz, who has made this issue one of his causes from his perch at the Santa Clara network computing company.
While supporting the concept, Cox said he had concerns over whether companies would be able to employ the web in a way that assures the company's disclosure provides 'non-exclusionary access' and meets the 'widespread dissemination' requirement of Regulation FD.
Cox, a recognized technophile, noted that since Regulation FD was adopted in 2000, there have been significant advances in technology with increased usage of the internet by businesses, consumers, investors and government agencies. He also said the SEC is looking for ways to 'tap the power of technology to enhance investor access to information.'
In musings on his blog throughout the fall, Schwartz, who is the most prominent US corporate blogger, has said Sun's web site is as good a place to distribute important company news as an established newswire - or better. He formally asked the SEC to consider online communications as satisfying Regulation FD in a September 25 letter.
Currently, the SEC considers a variety of mechanisms as satisfying rules including a press release, but also public conference calls, webcasts with adequate notification and filings on form 8K. Many still view the press release via an established newswire as the single best way to ensure that new material information is available to the investing public.
The concept of a company using its own web site to release important financial information is a controversial one. For one, hackers could post fake information to blogs. Others note that companies themselves could manipulate material after posting it. It also simply up-ends the established order. 'Can a company bypass the mainstream channels and be its own news service?' asks Debbie Weil, corporate and CEO blogging consultant. 'It seems scary and different.'
Venues like newswires or conference calls by recognizable company figures offer built-in content validation. It also may be simpler for investors to have just a few, focused channels for key business information rather than the free-for-all of the web.
'We view blogs as one piece of the communications puzzle,' says Cathy Baron Tamraz, president and CEO of Business Wire. 'But we don't think online postings are a legitimate substitute for a secure, credible disclosure platform.'
She notes her wire service offers a multi-channel distribution platform plus access to key audiences. 'It's not just technology, but the experience and know-how in dealing with market-moving information,' Tamraz says.
Above all, if web postings were deemed full disclosure, the public would have to go searching for news, and those individuals who stumbled across it first would have an advantage over everyone else.
Chairman Cox's enthusiasm for blogs may be dampened after his Friday afternoon posting on Sun's site stayed mostly a secret for at least two days; the big news didn't spread until it was picked up by the media on Sunday.
Schwartz's blog: blogs.sun.com/jonathan
by Anna Snider
