SEC Lets Companies Disclose Via Websites, Blogs

edadams passes along a note in the ABA Journal that reads "Corporations may now sometimes fulfill their public disclosure requirements under Regulation FD by posting information on their websites and blogs, rather than having news releases distributed by third-party companies, according to new guidance issued by the US Securities and Exchange Commission. The move is expected to cut compliance costs." Here is the SEC's policy announcement.

Comments

How is archival of this data managed?

[sapphire wyvern]

When companies post announcements via third party media, those announcements are presumably archived. I wonder what the impacts would be of blog-disclosures being retracted or edited after the fact, Ministry of Truth-style?

Re:How is archival of this data managed?

[u38cg]

Generally the value of this data is time-limited. I'm more concerned about how difficult it is going to be for the media to pick up important stories in a timely manner if they have to scour blogs and investor relations sites to glean newsworthy details. A third-party company can prioritise and feed important information to the market effectively.

Re:How is archival of this data managed?

[arbiter1]

this sounds like a ploy so info they put out they can still hide it for most part from people that need to know by making a small 1 sentence about it with a small link that less you read the entire site word for word you will miss it. so they can claim "o we posted a notice about it so if you had problems and didn't get it fixed or caused you injury is not out problem"

Re:How is archival of this data managed?

[Anonymous Coward]

Shock horror! The media might have to do some leg work!

Or just maybe a third party could monitor this blogs and sites, then prioritize and feed important information to the market effectively.

Re:How is archival of this data managed?

[Jah-Wren Ryel]

When companies post announcements via third party media, those announcements are presumably archived. I wonder what the impacts would be of blog-disclosures being retracted or edited after the fact, Ministry of Truth-style?

The SEC already serves as a repository of a variety of official communications from all listed companies. Seems to me they are the logical candidate for a centralized clearinghouse of all disclosures. Sure, let the companies post it wherever else they want too, but require them to first send a copy to the SEC who will archive it and put it up for public access ASAP. Make the copy on file with the SEC the official record and leave it at that.

It sure beats the problems that come with 'self auditing' like in this new proposal and it also means we don't have to pay someone (or more likely someones) to run a spider that hits all the websites and blogs of all the listed companies every 30 seconds in order to get newly released info.

Re:How is archival of this data managed?

[dmsuperman]

Not that we should necessarily _rely_ on it, but http://archive.org/ exists for such a purpose.

Re:How is archival of this data managed?

[stephanruby]

I wonder what the impacts would be of blog-disclosures being retracted or edited after the fact, Ministry of Truth-style?

Very likely. That's why for instance, most lawyers have their staff run diff programs between digital copies of contracts that are emailed back and forth between parties.

It's also very likely, that a few companies get caught doing this type of retroactive editing for their financial disclosures. It's trivial to catch, and given enough eyes -- someone is bound to catch discrepancies.

For instance, this firefox extension updatescanner will scan urls at regular intervals, alerting you when there is a change and giving you a particular diff for each change, all the while not relying on the official header information -- which is often incorrect. I suspect that given the recent news, both the McCain camp and the Obama camp have been using this kind of tool to track each others' unofficial campaign retractions and additions.

Re:How is archival of this data managed?

[JCSoRocks]

I have a feeling those third parties also provide some level of validation / identification. There's a huge potential for abuse... fake blog entry on your competitors site stating that this quarter's expected profits ended up being a huge loss anyone?

That's assuming hacking, although you wouldn't even have to go that far. Just make your own look alike blog with your own press releases. People have been duped by Internet fakes countless times... The only difference is that now it'll send a company's stock tumbling or skyrocketing.

Re:How is archival of this data managed?

[avaiki]

... Ah, the SEC. More than a trillion dollars wiped off the markets, and still they think of clever new ways to maintain their lapdog status. As a journalist, I've lost count of the links that have been lost in the e-ether, with the links to website admins usually failing as well. This is one way of ensuring that accountability disappears down the same plughole as investors hard earned cash.

Re:How is archival of this data managed?

[darrellheaps]

(I'm a little worried about commenting because I don't want to sound like an ad...but I wanted to respond to the question about archiving data. )

Couple of years ago I co-founded a SaaS company that provides tools to public companies to manage their web site. What makes our system very unique is that it captures a detailed record of the public web site and allows internal users to "timeshift" to view and report on the site at any point in time. Like the Wayback machine (www.archive.org) but with no time gaps.

We've found that alot of public companies are looking for a way to maintain an accurate record of what they are disclosing to the public. Some are using our product and others are using a combination of paid/open source CMS's along with manual processes.

In general I've found that most companies want a record to help protect themselves against false claims by external people "I invested because of something on your site" and also so that they have a record if there is an error and how to correct it. Most companies do not view the record as the smoking gun because they are confident in their disclosure process.

Over the last couple of years there I've only met one company that wasn't interested in maintaining an record. He said "i don't want a record of what I say because it's not always exactly true" - this was early on and is certainly the minority.

With this latest guidance I think it's clear that companies will be looking for more efficient ways to maintain records of what they're disclosing - for their own protection, rather than methods for how to deceive the public.

So let's see...

[The Ancients]

If one wants other shareholders to get the news, you Dig it.

Talk about moving into the 21st century at a great rate of knots.

Re:So let's see...

[urcreepyneighbor]

Talk about moving into the 21st century at a great rate of knots.

I'd rather be slow and safe than fast and fucked. :)

Blogs?

[MrZaius]

I can see the case for self-publication of press releases, although that seems to greatly expand the ability of a firm to pull back antiquated information. Hopefully some reasonable protections are taken care of in the forthcoming guidance. I'm also not sure that savings on the order of $100-1000/press release (from the results of a quick Google search - Correct me if I'm wrong) are so significant as to warrant moving away from common, easily indexed third parties.

That said, though, why on earth do they view something as informal and relatively uncontrolled as a blog (or worse - multiple blogs) as an appropriate outlet for this sort of information? This part seems grossly irresponsible.

Is there a draft copy of the changes out there somewhere?

Re:Blogs?

[rtb61]

There is no case for self publication, it is fraught with dangerous legal interpretation. Quality of bandwidth, whether all investors gain access at the same time, the site remaining accessible, let alone the issues of editing. Then the is the hacking of web sites and editing the now legal announcements, is the company then criminally negligent for failing to secure the data.

A central achieved copy for legal purposes is a requirement to ensure all investors gain equal access to all announcements, the cost in terms of the trillions of dollars invested in corporations is negligible.

Personally I would think it would make more sense to expand the service of the SEC so that they could handle all announcements and third parties could pick it up from there to redistribute or investors can go direct.

Re:Blogs?

[Rude Turnip]

The SEC already does this with the EDGAR database. Every financial statement and major press release has to filed there by public companies in the US. I have a Quick Search set up in Firefox that lets me type "ed [companyname]" into my address bar to bring up any public company's filings.

Re:Blogs?

[mounthood]

Thanks for the tip. Here's an example for anyone who cares. (Replace JAVA with %s)

http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=JAVA

Impermanence of websites

[DoofusOfDeath]

Would this make lawsuits regarding disclosure more difficult?

For example, suppose company Foo makes a tortuous misrepresentation of the quality of its R&D pipeline on a blog. Then I buy stock based on that. Then the company's lawyers realize the mistake and fix the blog. All within 10 minutes.

I sue, and say that the blog had bad information. They say, "We have no reliable record that the website ever showed that." I curse myself for not having had a Notary Public print out and stamp that web page.

I think this wouldn't happen with the current regime of printed disclosure statements. Could it happen with the proposed system?

Re:Impermanence of websites

[timmarhy]

no they still must keep an audit able record of their disclosures. this plus the fact once you put it on the net somewhere it's cached they would be screwed

Re:Impermanence of websites

[antifoidulus]

The SEC under Bush has made it quite clear that you as a shareholder do not own the company, the CEO and board do. This is just another example of how shareholders are getting fucked. Hell, the SEC ruled that you as a shareholder have almost NO recourse if the board picks a terrible CEO and then rewards them with tons of money. The SEC as of late is just another reason that despite being an American citizen, I refuse to invest my money in the United States. Bush has made it quite clear that the wealth that has been built up over the past 2 hundred years is meant to be devoured by a few greedy, incompetent, but well connected morons. If some scraps fall to the ground for the shareholders or employees, that is just collateral damage.

Re:Impermanence of websites

[maxume]

There isn't any reason for someone with an insubstantial number of shares to ever think that they own part of the company. It makes a lot more sense to think of the money as a loan if you can't do much more than vote in the shareholder meeting once a year.

Re:Impermanence of websites

[timmarhy]

wow. you people can turn anything into an anti bush message. best of all you don't even let facts or reality get in the way!

Re:Impermanence of websites

[Anonymous Coward]

Warren Buffet owns a substantial number of shares.

Re:Impermanence of websites

[Notquitecajun]

You're missing out on a lot of good the SEC has done in the last few years, then. They're the only guys not out glory-hogging and actually doing a few things to keep the market and regulations under control. They've limited - and are trying to further limit - naked short-selling and blatant stock manipulation; and, in particular, they did about as well as they could in the whole Bear Stearns debacle:

http://spectator.org/dsp_article.asp?art_id=13479 - yes, I know it's the Spectator, but it's a good review of Chris Cox. If you're mad at the government for actually staying out of the way of businesses, you're not being smart with your money. Overpaid CEO's of failing companies are a DROP in the bucket of everything that matters right now, and if that's your sole concern, you're going to lose out at one of the best times to buy into the market in your lifetime.

Re:Impermanence of websites

[antifoidulus]

Yeah, but considering the dollar is all but worthless, buying domestic stocks instead of foreign stocks STILL doesn't look worthwhile. The dollar is on its way down even further so I'm dumping as many of the fuckers as I can. As soon as I get paid, I convert all the money I don't spend into Euros and save them. The short selling thing is mostly for show, Bush is trying desperately to point the finger for failing the economy in a huge fashion(he doesn't want you to realize that he has presided over the biggest loss in American wealth since the great depression). He is trying to distract people from his failures by saying that they are really the fault of this nebulous group of "speculators" and "short sellers" that don't really exist.

Re:Impermanence of websites

[Notquitecajun]

Short sellers are all over the place. They accentuate when the market is down and make money.

It's getting time to sell those Euros, by the way, and reinvest in the American market - the dollar is going to go up over the next year with the fed raising rates soon.

You may want to consider selling soon, anyway, because if Obama wins, the capital gains tax you'll pay on any profit you realize will double....and Presidents only have a minor affect on any economy. We'd have been WAY worse off with some of the idiot Dem policies that would have put more money in government coffers rather than in the hands of people who actually know what to do with it. I would say Bush's policies have negated some of the damage because we can keep more of that money in our own pockets. The only problem is that the middle class needs even more relief.

Re:Impermanence of websites

[antifoidulus]

If the government wasn't spending money like a drunken sailor without taking anything in(ie like Bush), then the dollar tends to weak significantly. I don't see how the dems would have done worse by not spending money we don't have on wars we didn't need would have been worse for the economy. As it stands, the dollar is worth about half what it was when Bush came into office. Even given the fact that the economy has grown say 20% over his terms in office, the GDP measured in euros is about 60% of what it was...60%! The United States hasn't lost money like that since the great depression. How can you actually say with a straight face that this is a GOOD thing? Bush has killed the dollar forever with his reckless spending, and the Democrats nor McCain will be able to fix the damage he has done for at LEAST 50 years. Worst president in the past 100 years, probably the worst ever.

Re:Impermanence of websites

[Notquitecajun]

The dollar is NOT "killed forever." You'll probably see that once it gains some of its value back when we recover from this correction (any reference to a "recession" is sheer idiocy). Particularly in an increasingly global market, we almost need a weaker dollar to compete by selling more American-made products.

You're falling for the fallacy that a weak dollar=a bad dollar, which isn't necessarily true. We sell more stuff to foreign markets when the dollar is down - they're buying real estate in droves, in particular. Yes, the government spends too much money, but the key to that is to spend less, not tax more (Reagan proved that low taxes bring in revenue because of increased productivity), and yes, decrease our role in foreign efforts.

You're also not keeping much in perspective - in the Great Depression, the effect of the stock market at that time has been exaggerated over the years - and we recovered. Yeah, it was a period which stunk, but to imagine that things are all crap-gone-to-hell again is lunacy. A down market means opportunity, and more and more people are realizing that, and are "buying in" which is why we're not seeing - and probably won't see - a serious crash. If a bank like Indymac can fail and we can pretty much forget about it two weeks later, we're doing pretty well.

Blaming the President won't put money in your pocket or make you a smart investor. That's up to you.

Re:Impermanence of websites

[phillous]

which is all well and good, except that you're flat out wrong. I won't even bother to cite myself here, cause you're SO wrong that I think even citing myself wouldn't convince you otherwise. In massive companies where the share capital is in the billions, even 5% - 10% of the issued share cap is enough to start throwing your weight around.
In the UK forexample, get up to 30% and you're required to make a bid for the remainder of the company. And umm, what do you think happens when you own 100% of the shares? oh right... you own the company. The board and the CEO are EMPLOYED by the company (which is OWNED by the shareholders) to run the company.

The same is true on a much smaller scale. If you own a resturant, you'll probably hire a resturant manager and a head chef... If the foods crap you fire the chef, if the resturaunt is going down the crapper, you fire the management.

At the end of the day, owning that many shares (and we're talking billions of dollars worth, not whatever pittance you pay in your pension), then you have a lot of money, and in the corporate world, money=power. Just because you and your 5 whole shares which equates to 0.00001% of the company, and no one gives a crap what you think? pah. I've ranted enough. Go and read a grown up newspaper... the kind without the naked girls on the cover... the kind without a sports section.

Re:Impermanence of websites

[maxume]

Does your rant still make sense if I think that 1% of a company constitutes a substantial number of shares?

Re:Impermanence of websites

[maxume]

Or maybe you responded to the wrong comment? Were you really trying to respond to this comment:

http://slashdot.org/comments.pl?sid=635873&cid=24477973

???

Re:Impermanence of websites

[dmclap]

You say that like there's something inherently wrong with a weaker dollar. First of all, bear in mind that the dollar still beats many other currencies in other countries. But beyond this, if the dollar weakens, then travel to the US and the purchase of US goods suddenly become more appealing to foreigners. Think about it if you're a European; your Euro now goes further than it ever did before. Maybe now would be a good time to travel to the US and use that money while it's good, and maybe buy an iPod or a laptop, or something else that, even with duty fees, is way cheaper now than it would be back in Europe (I know several people who have done this just this summer). Meanwhile, people in the US are less likely to buy imported goods, since they're more expensive. This increases the amount of money in the US economy, which is usually considered a good thing (since it comes from real value, and not just printing money).

Also, I'm fairly confident that there was fairly massive deflation during the Great Depression. So, that argument doesn't really hold up either (unless I'm misunderstanding it).

I'm not arguing the point that Bush has been a horrible President. But let's keep ourselves to important criticisms, and not get caught up in inflation arguments.

Re:Impermanence of websites

[Guido del Confuso]

I think so. If you and a few other like minded people each own 1% of the shares, that can quickly add up to some pretty substantial sway over the direction the company takes.

Re:Impermanence of websites

[maxume]

Yes, that is exactly what I meant. The rant that I responded to was in response to a comment I made about *insubstantial* numbers of shares...

small print ?

[Anonymous Coward]

I allready get the feeling that those (mandatory!) disclosures will be tucked away as some "small print" somewhere, stored in a locked, turned to the wall cabinet hidden behind a door that says "beware for the leopard" which is located in the basement to which the elevator does not work and the stairs are broken.

The reason that the data needed to be presented by a third party had/has a reason. Ignoring that reason is pretty-much criminal.

"It's on the website!"

[urcreepyneighbor]

Call me a cynic, but couldn't this be used to obfuscate - or, hell, intentionally hide - information? Instead of being forced to go thru well-known channels, some PR punk could brush off a request by claiming "it's on the website!"

Re:"It's on the website!"

[timmarhy]

any attempt to hide information comes with huge fines, jail terms and delisting as possible outcomes. there is a reason companies are afraid to fuck with SEC, and there is a reason they will say things in disclosure statements they would NEVER say publicly. just look at SCO they actually listed their lawsuit failing as a possible outcome in one filing.

Re:"It's on the website!"

[DigitAl56K]

Subscribe to Google alerts or similar services for companies and products you're invested in. Within an hour or two of hitting the web you have the information in your inbox.

What do you mean it wasn't published

[Chrisq]

It was clearly available on a the third page of "Archived news" via a password protected link named "Beware of the Tiger".

Its not our fault if you don't take an interest in local affairs.

Re:What do you mean it wasn't published

[logfish]

Second that. Although I must admit I don't really read the local newspaper more then I do a companies blog. Maybe they should force it to be available in RSS and no copyright may apply (maybe they should force a creative commons license on it)

This helps the small investor

[Alain Williams]

Currently the advantage is with the large boys since they can afford the subscriptions to the approved outlets ... they thus get to know the news first. This will help to level the playing field.

Dear Myspace Friends of Enron

[sleeponthemic]

We is goin' down to Infinitee Nightclub wiv our new legally acquired funds!*

BTW, company totally looking possibly broken.

Drinks at 9, Lines at 7 LOL!

L8rs
Ur G'z @ Enny Ron

The CEO's blog

[MosesJones]

Monday

Today I met some people from Company X and it was all brilliant and great. Fabulous news that we are doing a big new partnership

Tuesday

I had pie for dinner

Wednesday

We've just lost $2bn as a result of an internal fraud, the FBI and CIA are now involved and all senior executives are being questioned

Thursday

I'm here in Brazil today speaking with their justice ministry, the weather is fantastic and I'm off to play golf later.

Now Jonathan Schwartz at Sun really blazed the trail here, but surely the really thing for a company to do is have such a god-awful boring blog full of mundane crap that any bad news is "published" in a place that no-one looks.

Re:Wow.....

[GBC]

I don't think you would have a particularly long career as a trader if you did that!

If you buy stock in point 1 at $X, disclose bad outlook in point 2 (presumably driving the price of said stock down to $Y), THEN sell in point 3 you would be selling at a loss of $X-$Y.

Re:Wow.....

[rugatero]

The GP's point is that by selling at 12.01, the obscure web posting has not had time to affect the stock price. You can sell up before the price crashes, but plausibly state that you were acting on publicly available knowledge.

SEC filings...

[Notquitecajun]

I believe all the official releases that have to be made ALSO must be filed with the SEC. You can change it on your website, sure, but everything that is required by law is required by law to be with the SEC. Someone correct me if I'm wrong.

It's a business opportunity

[smittyoneeach]

Whoever aggregates all of these disclosures, and rates companies based on their accuracy and fidelity over time, is probably going to have a lot of customers.

Re:It's a business opportunity

[smittyoneeach]

You can do the dilligence yourself, or delegate. Cost of doing business. There is always agriculture, should you grow frustrated.

Re:NOINDEX NOARCHIVE NOFOLLOW = hidden

[Thelasko]

All they have to do is flag it so search engines don't index it and they can keep the fine print more hidden than ever, yet say it was there all along.

That's what I was thinking too. In order to do this, the SEC should have added requirements for the robots.txt file, and mandated that the there be a link trail from the corporate home page. Just because the documents are on a web server, and therefore technically on the internet (web implies there are links to it), doesn't mean they are available to the public.

The major players on Wall Street are usually very computer savvy these days (aside from Jerome Kerviel). If this plays out like I think it will, I expect analysts to devote massive amounts of computing power to making queries of major corporate websites to find hidden documents.

What about the 8-K

[Hangtime]

Everytime a significant event occurs the company must publish it on one of the wire services and file an 8-K: Current Report with the SEC. My interpretation would be they would continue to have to file 8-Ks, but they could post the information on the investor website instead of sending it to the wire service. If you are filing 8-Ks, you still have a distinct and 3rd party managed repostitory.

I don't get the concern.

[Roofus]

What's the concern over this? If you want to know how a company performed, read the damn 10Q/K. Those are archived here: http://www.sec.gov/edgar.shtml . Stop relying on press releases as real news.

RSS...

[I'm not really here]

It sounds to me that, in addition to blogging it or posting it on a website, that this would also allow a company the option to create an RSS feed that passes this inforamation to the various news organizations instead of having to send it (basically automatic push instead of manual push). The news organizations can subscribe and get updates automatically. Sounds good to me. As long as they still have to file with the SEC, this sounds like a good move forward... actual progress... it seems so strange to see it happen.

cut costs?

[beerzerkr]

What is the motivation? The move will "cut compliance costs" but will take money away from PR firms, so it seems like a wash.

Re:fear is unprecedented evile's primary weapon

[CroDragn]

Makes me wish for the Gay Nigger and that Shit Eating trolls. As sad/disturbing/disgusting as they were, at least they used proper punctuation and grammar so I knew what they were trying to say. I can't even follow your logic for a complete sentence.

Re:Wow.....

[IHC Navistar]

Whoops! An embarrassing mistake!

Boy is my face red.....and so are my accounting books!

So *that* explains it!