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.

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

[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.

"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.

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.