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?

[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?

[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.

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.

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.

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

[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]

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

[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.

"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.

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.

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.

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.

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.