SEC Guidance enables corporate websites and blogs to be fair disclosure
Late last week the SEC issued guidance on how companies can use corporate web sites and blogs for the release of material information under regulation Fair Disclosure. This timely announcement has the potential to dramatically impact the corporate disclosure industry.
Rather than outlining the content of the guidance I thought I would provide some initial thoughts on what I see as being the key messages of the interpretive release. If you are not familar with the guidance please see the following links for more information.
SEC Docs
Some Initial Blog Posts
- SEC OKs websites and blogs for Reg. FD
- SEC To Recognize Corporate Blogs as Public Disclosure, What This Means for Wires and Press Releases
- SEC To Recognize Corporate Blogs as Public Disclosure. Can We Now Kill the Press Release?
- The emerging self-distribution news model
Here are a few initial take aways from the announcement:
The playing field of disclosure has been leveled. Newswires no longer have the built in demand for their services that they did before. (NYSE still mandates the use of wires but the assumption is that they will follow suit). This does not mean that the Newswire’s are going out of business, but it certainly means they are going to have to compete with more than just each other moving forward. Newswires will need to look closely at their business model and determine how they are going to compete in a world where the distribution of information is free (welcome to the Internet).
The press release is not dead. There is nothing in any of the SEC announcement that speaks to companies not using a press release. The press release is a document type, not a distribution method. It can be posted to a corporate web site, company blog or sent out over a newswire. IROs and public companies have well defined controls and procedures around the creation of press releases and other disclosure documents. This recent announcement does not impact the importance of using a press release to disclose information to the market, just how the press release gets from the company to the investor.
In order for information to be “Public” (and applicable to RegFD) the corporate web site needs to meet 3 criteria.
- a company web site is a recognized channel of distribution
- posting of information on a company web site disseminates the information in a manner making it available to the securities marketplace in general, and
- there has been a reasonable waiting period for investors and the market to react to the posted information.
As you can see, these are quite general and not prescriptive, this means that companies will need to be committed to meeting these guidelines and likely it also means that new vendors will step up to help. This criteria warrants a post on its own, so I won’t go into detail on each aspect here.
The guidance is principle based and future proof. If the SEC had come out and said “you must use RSS and email alerts” it would be creating the same problem it is now getting out of. By using a principle based approach it allows the market to determine what is acceptable and ensures that certain technologies and/or companies are not able to create protected industries (like the newswires did). Having said that, a principle based approach also creates a grey zone that lawyers do not like, which means that the mass market of issuers will likely not change anything, until the market adopts a new standard. This will require forward-thinking issuers and vendors to innovate and create this new standard.
The corporate web site is the podium for all disclosure. We’ve been saying this for some time (as have many others) but it is now official. The corporate web site is the hub of corporate disclosure. With this new guidance and the combined innovated efforts of issuers and vendors, we will continue to see the corporate site dominate the world of disclosure for the foreseeable future.
I would certainly advise all those in the corporate disclosure space to read the full 47 page report. It’s long but there are some great comments in there.
Related posts:
- How to make your website a “public” disclosure channel under new SEC guidance and RegFD
- RSS feeds and email alerts increase after SEC guidance
- Blogs and Web Sites for Disclosure
- How to implement new Reg. FD web disclosure – a legal opinion
- Web Disclosure Adoption On the Rise
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seems strange to say that a press release is not a distribution method.