Before I get into the recap, I’d like to thank @bropo, @AVGoldberg, @Box_IR and Z_Kommunikation in advance. Honourable mentions go out to @ir_practice and @pkiss as well.

This week, the discussion centered around two main questions.  The first pondered ideas for increasing board/shareholder engagement.  The second tackled how IROs will need to communicate differently this proxy season, due to new era of governance stipulations.

Q1: ‘Want 2 f/u on my RT by @Matt_Brusch: http://bit.ly/apkoTl & discuss ideas 4 increasing board/shareholder engagement.’

A snippet from the article:

Shareholders expect you not only to know your business — how to control risk, market, compete, profit and grow in an increasingly global marketplace — but, in many cases, to know about and effectively oversee the impact that your businesses may have on the financial system.

At the same time, much of the regulatory framework within which your businesses operate is also changing. As SEC Chairman, I recognize that many of our new rules, and the rules that we will be adopting over the next two years, will profoundly impact both how your boards fulfill their responsibilities, and how you communicate those activities to your shareholders.

@q4websystems: ‘Article states ‘new rules adopted over next 2 yrs., will impact both how your boards fulfill their responsibilities and…’
@q4websystems: ‘…how you communicate those activities to your shareholders.’
@bropo: ‘As with most comms plans, I’d make this multi-phase. If not yet doing, provide BoD w/qtrly updates on s/h sentiment.’
@bropo: ‘Reports/discussion can be both quant (survey-based) & qualitative (capturing daily discussion). Protect anonymity of s/h.’
@bropo: ‘Would also make certain to factor current dialog/concerns into quarterly script so s/h hear their concerns being addressed.’
@q4websystems: ‘@bropo I agree with u about 1/4ly updates to board. Should also incl. training on what can/can’t b said.’
@bropo: ‘Next, would roll-out a face-to-face strategy – start first with investor days, and then take key Bd members on the road.’
@bropo: ‘In conjunction with all of that, make it real so that shareholder questions get directly to the Bd – responses w/control.’
@bropo: ‘Training definitely required before you take them on the road. Practice by including them in onsite activities, like s/h visits.’
@bropo: ‘Visits to the company, that is. When they’re on track, then you can invest in taking them on the road.’
@bropo: ‘But, in taking them on the road, their presence shd be logical, ie rolling out a new strategy in area where they have expertise.’
@AVGoldberg: ‘Most alrdy do1/4ly updates 2 bd & factor S/H sentiment in earnings remarks. Tkng key Bd members on the road wld be something new.’
@bropo: @AVGoldberg ‘You would think … I’m always surprised at how many do not yet report to the Board! Or, info doesn’t get to BoD.’
@AVGoldberg: ‘Not sure how many Bd members would be willing to go on the road to investor community.’
@bropo: @AVGoldberg ‘I think the more BoD members are expected to u/s what’s going on, the more likely they would consider.’
@q4websystems: ‘Esp.on gov.issues RT @bropo: @AVGoldberg think the more BoD members r expected 2 u/s what’s going on, more likely they wld consider.’
@bropo: @q4websystems ‘Exactly on governance issues! If you risk action because of inaction, you’ll reconsider involvement & engagement.’
@q4websystems: ‘Posting gov. policies in pdf on website is not enough anymore….’
@q4websystems: ‘Article rightly states that clear conversations abt how co. is governed & why & how decisions r made.’
@bropo: @AVGoldberg ‘Being a BoD member is a greater responsibility with more accountability than ever.’
@AVGoldberg: ‘Agree BOD has more responsibility than evr, but they think it’s R job 2 keep them informed. If did go out, training wld b key.’
@bropo: ‘And I think they should be engaged at annual meetings. Present reports for their area, i.e., bd recruitment, compensation, etc.’
@q4websystems:@bropo ‘Agree boards shld have more visibility when possible i.e. @ Annual mtg. need 2 convey board is right choice 4 the co.’
@bropo: ‘That said, as with all things, should begin with a strategy, a plan and be implemented with care, control and checks.’

@q4websystems: @AVGoldberg ‘I agree most do 1/4ly. How can IROs ensure board reads report?’

@bropo: ‘Send directly?’:)
@q4websystems: @bropo ‘In addition 2 sending directly what about presenting info. 2 them in person on via webcast/conf. call?’
@AVGoldberg: RT @bropo: ‘IRO 2 speak at BD mtg?’
@bropo: @q4websystems ‘However you can reach them. Many are still not super savvy digitally. Some cos. allow IRO to speak privately to BoD.’
@bropo: @q4websystems ‘Conference calls seem work for them! Reports are often better, dep. on age/composition. Address as works: > one way.’

@bropo: The question is, with all of this accountability and responsibility, are BoD members going to want better comp?

@q4websystems: @bropo ‘Another consideration is BoD’s typically sit on > than one board – How 2 keep them engaged?’
@bropo: ‘Their responsibility. We help.’

@q4websystems: ‘Speaking of governance…another gr8 article 2day that discusses merits of talking 2 investors face-2-face: http://bit.ly/bsS6FY

Q2: ‘IROs need 2 comm. diff. this proxy season. How 2 go about ensuring new issues i.e. say-on-pay are understood by investors?’

A snippet from the article:

As companies approach the 2011 proxy season, they are rethinking the way they reach out to investors and how that communication can be more useful to both parties?

Next proxy season will stand apart in terms of investor communications due to new items on the ballot as a result of demands from the SEC and Congress, including say on pay. And even though proxy access has been delayed, experts say good investor relations should be exercised now to lay the groundwork for when and if access is granted.

@bropo: ‘I think IROs first need to internalize that this is a different kind of voter than they’ve had to address in the past.’
@q4websystems: ‘Proxy issues r another key area board shld b informed & able 2 speak to.’
@bropo: ‘This is a less sophisticated voter, so no more financial/legal gobbeldygook. Play it straight. Address issues upfront/head-on.’
@bropo: ‘It’s a great time to establish a Facebook page that you can point to and provide easy access to voters who own thru big funds.’
@q4websystems: @bropo ‘I like idea of FB page. shld also co-ordinate info. on website 4 those investors who aren’t using soc. med.’
@q4websystems: ‘I think it’s imp. to keep investors informed of key gov. issues thruout yr, which IMO may make proxy season a bit easier.’
@bropo: ‘And not just “retail investors” that so many seem to disdain. Of course, always point back to posted/filed info.’
@q4websystems: ‘Article talks about how Time Warner meets with 50 lrgst investors during proxy season, & fewer during yr. sometimes with IRO.’

@q4websystems: ‘Should IRO or corp. secretary be in charge of informing investors esp. during proxy season? In my exp., IR dept. did this.’

@bropo: ‘In my experience, IRO does this better. Of course, report & update Corp Sec on a regular basis.’
@q4websystems: ‘Agree need 2 work 2gether’
@q4websystems: ‘As I stated b4, gov. issues shld be discussed thruout yr. easily done @investor anal. day or on 1/4ly conf. call.’
@AVGoldberg: ‘Advantages to both IRO & Corp. Sec. Think answer depends on co. and s/h base.’

@q4websystems: ‘What about activist investors? hard 2 control if they call Board directly.’

@bropo: ‘Shd they b a surprsie?’
@q4websystems: ‘Hopefully not’ RT @bropo: Shd they b a surprsie? RT
@bropo: ‘IRO shd be aware/prepared/reporting. Agreed upon responses.’RT @q4websystems: Q2: what about activist investors?

@bropo: ‘Can’t always prevent/control, team shd be prepared.’ RT @q4websystems Q2: activist investors? hard 2 control if they call BoD directly

Well that is the end of another great #irchat.

Don’t forget to join us every Thursday @ 11:00 a.m. EST. In the meantime, if you have any questions you’d like to submit for an upcoming #irchat, tweet @meetthestreet or send an email to sherylj@q4websystems.com and I’ll pass it along.

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Google intends to make future announcements regarding its financial performance exclusively through its investor relations website.

Google is able to do this based on the SEC guidance from Aug 2008 regarding the use of websites for disclosure. This guidance states that under certain circumstances, companies can rely on their websites and blogs to meet public disclosure requirements under Reg FD.

As we all remember all too well, shortly after this regulatory change the market collapsed and this new channel quickly faded into the background, while most companies fought to survive the worst recession many of us have ever seen.

However, with 2009 behind us and the recovery underway, the first quarter of 2010 has seen the most activity on the web disclosure front yet, with a number of companies testing out new tactics. Let’s take a look at some examples.

BGC Partners (Nasdaq: BGCP)

BGC Partners, Inc. (BGCP 6.51, 0.00, 0.00%) , a leading global intermediary to the wholesale financial markets, today announced that it plans to issue an advisory release after the close of market on Wednesday, May 5, 2010, notifying the public that a complete and full-text financial results press release has become accessible at the “Investor Relations” section of http://www.bgcpartners.com.

Expedia (Nasdaq:EXPE)

Expedia, Inc. (Nasdaq: EXPE) today announced fourth quarter and full year 2009 results through a press release that is available now at http://www.expediainc.com/ir.

From Q4 Earnings Call – Seeking Alpha Transcript “You may also have noticed we have changed the way we are distributing our earnings release. Rather than put the release out over the newswire, we are pointing people to our IR site where they can pull down the PDF version. You should expect us to continue this practice going forward.”

Google (Nasdaq:GOOG)

MOUNTAIN VIEW, CA–(Marketwire – April 15, 2010) -   Google Inc. (NASDAQ: GOOG) has released its first quarter 2010 financial results. Please visit Google’s investor relations website at http://investor.google.com to view the earnings release. Google intends to make future announcements regarding its financial performance exclusively through its investor relations website.

Marathon Oil (NYSE: MRO)

HOUSTON, April 6, 2010 – Marathon Oil Corporation (NYSE: MRO) announced that the Company will begin issuing advisory news releases notifying investors and other interested parties when new and material information is available on its website, in compliance with the U.S. Securities and Exchange Commission’s guidance regarding “notice-and-access” news releases. With this change the issuance of full-text financial news releases via a wire service will be discontinued.

Reis (Nasdaq: REIS)

Reis, Inc. (Nasdaq:REIS), a leading provider of commercial real estate market information and analytical tools, announced that it plans to issue an advisory release before the opening of The Nasdaq Stock Market on Monday, March 15, 2010, notifying the public that a complete and full-text financial results press release has become accessible at the Investor Relations portion of Reis’s website (http://www.reis.com).

Tellabs (Nasdaq: TLAB)

NAPERVILLE, Ill., Jan. 26 /PRNewswire-FirstCall/ — Tellabs is announcing its fourth-quarter and year-end 2009 results and new quarterly dividend. A complete version of the news release is available at http://www.tellabs.com/news/2010/4q09.pdf.

We are certainly still in the early stages of web disclosure, however it is interesting to note that only Google has announced the intention to use its website exclusively and to no longer use advisory releases (aka “notice and access” press releases) . For the rest, each has moved to a shorter release with a link to their IR website for the details.

As expected we have heard from both sides of this debate, pro web disclosure and pro wire disclosure. Here are two of the popular posts:

Google moves to web disclosure for Reg. FD
http://www.irwebreport.com/daily/2010/04/16/google-moves-to-web-disclosure-for-reg-fd/

Is Google’s Latest Move Evil?
http://www.fool.com/investing/high-growth/2010/04/19/is-googles-latest-move-evil.aspx

In addition to the above posts I’ve been a part of two great discussions on the topic on LinkedIn. Both in the NIRI group (you have to be a member of NIRI to view) and also in the IR 2.0 group.  Each provides a good balance of opinion on the pros and cons of web disclosure.

In general, I think that only large companies with a significant following are a good fit for web disclosure. Companies like Google and other well known brands, have the ability to use their websites as a recognized channel of disclosure and can instruct the market to use their site and all available alert options (email, RSS, social) to keep abreast of news.

For most companies, either continuing to use a full-text press release alongside with posting it on their website or using an advisory/notice and access release are the two remaining options.

I am not against using press releases. In fact here at Q4, we use press releases when announcing big news.  I can easily say it is not a silver bullet, but used in conjunction with web and social channels, press releases can help increase awareness about your company.

Having said that, I think that the hybrid approach of continuing to use the wire to publish advisory releases that link to the IR website for detail(s) is where the market is headed.  The examples previously mentioned are an early indication that this approach may be the one most widely adopted going forward.

Using advisory releases gives companies the additional reach that a newswire can offer, while keeping costs down, and directing investors to the website for the details.  Linking to the website provides many search engine benefits for the company and gives them an opportunity to build direct relationships through subscription options like email, RSS and social channels.

It’s important to note, if you are going to direct investors to your site, you need to make sure it is ready for them.  IR website best practices, enterprise level hosting and accessibility + mobile access are all important areas to focus on to ensure that you can leverage the increased traffic to your site.

The benefits of using your IR website in this matter include:

• Improved disclosure & transparency – linking to your website allows you to share Excel files and formatted documents, which give investors more context and downloadable assets than reading the news on a third-party website.
• Improved efficiency –  putting the full-text release on the website allows you to manage only one version of the release and related financial tables , no longer will you have to juggle multiple versions with the newswire
• Increased investor traffic – linking to your website as a recognized disclosure channel will increase the number of investors to your website and allow you to provide more context  around your business
• Increased direct subscriptions and followers - with more investors visiting the website, there is an increased opportunity for them to register for email alerts, RSS and social updates –allowing you to build relationships directly.
• Reduced costs over time – moving to advisory releases reduces costs simply because these releases are shorter and commercial wires charge by the word.

We’re going to keep track of this trend and will report back in Q2.  If you know of other companies using these tactics, please include in the comments or share with us on Twitter or LinkedIn.

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The focus of the paper is how online communication tools, in particular social media, are influencing the communication practices of corporate IR departments at public companies of all sizes. It also examines the question of why corporate IR departments have been slower to adopt social media communications tools than their marketing and corporate communications counterparts.

Dave currently splits his time between teaching public relations in the Department of Journalism and Mass Communication at Abilene Christian University in Texas and works as Director of Investor Relations and Corporate Communications for First Financial Bankshares, Inc. (Nasdaq:FFIN).

While I highly recommend that you take the time to view the presentation in its entirety (below), I have summarized some of the key findings.

LETTING OTHERS TAKE THE LEAD

The use of social networks by public companies has increased, although many companies are still sitting on the sidelines watching to see what evolves. The following stats indicate that the realm of investor relations has been slow in the adoption of social media:

• A study by Barnes and Mattson, confirmed that 57% of all large charities use blogs, compared with 41% for colleges and universities and only 16% for Fortune 500 corporations.
• The same study also found only 28% of the corporate blogs linked to Twitter accounts, 21% linked to corporate videos and only 10% linked to podcasts.
• An informal survey conducted by Bulldog Reporter’s IR Alert of 270 IROs and CFO’s, found that only 12.5% of respondents use social media to disseminate financial information to shareholders and the financial markets.
• Further, large companies (as defined in Bulldog’s study as those with $500 million or more of annual sales) fared even worse, with only 3% using social media as part of their IR communications.

The reluctance of IR departments to pursue social media is surprising given the evidence that institutional investors and analysts are using social media tools for both business and personal reasons:

• A survey of 455 analysts and institutional investors in July by the Brunswick Group found that 42% read blogs and that 20% stated they had used the information on a blog to make an investment decision or recommendation.
• The Brunswick study also found that 58% of its respondents believe social media will become increasingly important in helping them make investment decisions.

Institutional investors and analysts are already using corporate websites to seek out company information. A study by Rivel Research Group supports this, reporting that 75% of institutional investors look for information on corporate websites “weekly if not daily”.

Evidence is growing that institutional investors and analysts, already accustomed to searching corporate websites for information, are now turning to social media. For example, sites such as Seeking Alpha, the largest financial blog aggregator, has hundreds of blogs by ex-analysts, professional investors and fund managers.

LEGAL AND REGULATORY CONCERNS

While some IRO’s are sitting on the sidelines because they don’t yet see the value of social media, the primary holdback to adoption is both legal and regulatory issues.

The SEC has sent mixed messages since they issued their “Commission Guidance on the Use of Company Web Sites” in August 2008. On the one hand, the report praised the Internet for allowing companies to make information available to investors “quickly and in a cost-effective manner”. On the other hand, the same report cautioned that the antifraud provisions of federal securities laws apply to blogs and to electronic shareholder forums in the same way they do to traditional forms of corporate communication.

However, while the SEC may not have given the definitive green light to using social media for IR, some feel they are showing tolerance and they recognize that companies are still trying to figure out whether these newer forms of online communications fit into their broader communications strategy.

There is a general consensus within the IR field that social media is a supplement to existing disclosures and won’t replace news releases, SEC filings or conference calls in the near future, if ever. In a recent webinar hosted by Business Wire, Carol Stubblefield, a securities and corporate law specialist with Baker and McKenzie reinforced the aforementioned by stating “You should do social media on top of what you are already doing, not as a replacement”. She then emphasized the importance of establishing social media disclosure policies and informing employees about the company’s policy toward their use of Twitter, blogs and other channels for discussing company business.

SOCIAL MEDIA PIONEERS

Despite the ambiguity of legal and regulatory issues, a small-but-growing number of companies are using social media for IR. Within this group, Twitter has emerged as the early favorite due to its simplicity and ability to link back to news releases, conference call announcements and other disclosure information thatresides on the company’s website.

Research that supports this includes:

• A recent study by Q4 which identified that 55% (of a sample of 80 companies with Twitter accounts), are using Twitter for IR, with the companies mainly providing links back to their earnings release, conference call notice and webcast.
• A few of the companies included in the study – eBay and CGI group even live-tweeted the earnings call. Both of these companies type the tweets out ahead of time, which are derived from the conference call script, ensuring that they only post words on Twitter that are being communicated on the conference call.
• Other uses of Twitter by public companies include reporting from annual shareholder meetings (J&J and EMC Corp) and analyst days (eBay).
• Dell does have a Twitter account, but they are believed to have the first corporate blog dedicated to investor relations – each quarter, Dell records a video conversation (Vlog) with its CFO to announce and explain recently disclosed earnings results.

Robert Williams, Director of IR for Dell was interviewed for the report and said he’s “surprised” that more large-cap companies have not followed Dell’s lead and established IR blogs. He cites the following three reasons:

1. The small size of most IR departments. Unlike Dell, which has seven people on its IR team, the average company has only one or two employees dedicated to IR.
2. A lack of understanding about blogs. Williams said many corporate executives worry that blogs will be difficult to manage and that they won’t be able to answer users’ questions.
3. The fear of disclosure mistakes and shareholder lawsuits.

Williams feels that it would be hard for a small (one or two person) IR department to manage a blog along with all other expected tasks, but in a recent webinar he listed five things for larger companies to consider before starting an IR blog:

1. The blog should not be used as a substitute for news releases, SEC filings and the traditional means for communicating material information.
2. It must be credible by communicating factual and accurate information and avoid expressing opinions on investor issues.
3. It should be strictly for investor communications and should not be used for marketing the company’s products and services.
4. An IR blog can be an effective tool to counter misperceptions about the company without responding to specific rumors.
5. It’s important to view the blog not only as a means for distributing information, but as a way of listening to what your investors are saying.

Public companies who are using social media for IR are finding they can leverage their time and investment by coordinating their efforts using multiple social media tools together. For example, both Dell and eBay use Twitter to announce new postings on their blogs and Dell posts its Vlogs on YouTube. This can significantly expand the audience and drive more traffic back to their website and blog.

OTHER SOCIAL NETWORKS

As stated, more companies seem to be using Twitter for IR than are using Facebook, LinkedIn and YouTube. For example, although Facebook is being used by public companies the pages appear to be managed by corporate communications, PR or marketing departments, not by IR.

Many companies in this study were found to include links from their corporate websites or blogs to accompanying information on Twitter, Facebook, LinkedIN, Flickr and YouTube. No companies were identified that use MySpace for IR.

Another emerging category of tools are document-sharing or “content” sites that allow IROs to expand the distribution and improve the display of existing types of corporate documents, such as news releases, presentations and SEC filings.

For example, SlideShare is one of the more popular document-sharing sites that enable companies (and individuals) to post PowerPoint presentations, PDFs and other document formats on a public site where they can be viewed. In a recent webinar by Q4, SlideShare was described by Q4’s co-founder and CEO, Darrell Heaps as “the YouTube of presentations”.

SlideShare makes it possible for a company’s presentation to go “viral” and be spread from investor to investor, either via e-mail, embedding on a blog or website, or through a host of other tools.

Lastly, Docstoc is another document sharing site with an emphasis on content other than presentations such as news releases or reports, which can then be shared by readers or embedded on their website and blogs.

IR & SOCIAL MEDIA: LOOKING AHEAD

According to Dave, “A growing number of IROs already understand the potential of social media, and it may be only a matter of time before social media tools become as mainstream as websites and conference calls in modern corporate IR work. The SEC could encourage this development by providing more definitive instructions to guide companies as they chart their way through these new waters. Those instructions would help eliminate the most worrisome objection to the use of social media at this time, the fear of regulatory and legal risk. Hopefully the SEC will partner with NIRI, the stock exchanges and other interested parties to develop critical guidelines for the use of social media in corporate investor relations practice.”

I completely agree, and (without dating myself too much) remember the day when people worried about having conference calls – now the investment community raises an eyebrow if a company doesn’t have an earnings call! More direction is needed by the SEC – while some companies are taking the first steps and becoming pioneers in their use of social media, others need some guidelines to help them get started.

I previously blogged about tips that can help IROs get the C-suite on-side with adopting social media for IR. Perhaps if concrete guidance is put out by the SEC, IROs could use this guidance (in addition to research that shows that public companies are using social networks for IR), to provide to their legal and management teams as evidence that social media can be used effectively if executed within regulatory guidelines for IR.

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Regulation FD

Last Update: August 14, 2009

These Compliance and Disclosure Interpretations (“C&DIs”) comprise the Division’s interpretations of Regulation FD. Some of these C&DIs were first published in prior Division publications and have been revised in some cases. The bracketed date following each C&DI is the latest date of publication or revision.

Section 101. Rule 100: General Rule Regarding Selective Disclosure

Question 101.01

Question: Can an issuer ever confirm selectively a forecast it has previously made to the public without triggering the rule’s public reporting requirements?

Answer: Yes. In assessing the materiality of an issuer’s confirmation of its own forecast, the issuer should consider whether the confirmation conveys any information above and beyond the original forecast and whether that additional information is itself material. That may depend on, among other things, the amount of time that has elapsed between the original forecast and the confirmation (or the amount of time elapsed since the last public confirmation, if applicable). For example, a confirmation of expected quarterly earnings made near the end of a quarter might convey information about how the issuer actually performed. In that respect, the inference a reasonable investor may draw from such a confirmation may differ significantly from the inference he or she may have drawn from the original forecast early in the quarter. The materiality of a confirmation also may depend on, among other things, intervening events. For example, if it is clear that the issuer’s forecast is highly dependent on a particular customer and the customer subsequently announces that it is ceasing operations, a confirmation by the issuer of a prior forecast may be material.

We note that a statement by an issuer that it has “not changed,” or that it is “still comfortable with,” a prior forecast is no different than a confirmation of a prior forecast. Moreover, under certain circumstances, an issuer’s reference to a prior forecast may imply that the issuer is confirming the forecast. If, when asked about a prior forecast, the issuer does not want to confirm it, the issuer may simply wish to say “no comment.” If an issuer wishes to refer back to the prior estimate without implicitly confirming it, the issuer should make clear that the prior estimate was as of the date it was given and is not being updated as of the time of the subsequent statement. [Aug. 14, 2009]
Question 101.02

Question: Does Regulation FD create a duty to update?

Answer: No. Regulation FD does not change existing law with respect to any duty to update. [Aug. 14, 2009]

Question 101.03

Question: Can an issuer ever review and comment on an analyst’s model privately without triggering Regulation FD’s disclosure requirements?

Answer: Yes. It depends on whether, in so doing, the issuer communicates material nonpublic information. For example, an issuer ordinarily would not be conveying material nonpublic information if it corrected historical facts that were a matter of public record. An issuer also would not be conveying such information if it shared seemingly inconsequential data which, pieced together with public information by a skilled analyst with knowledge of the issuer and the industry, helps form a mosaic that reveals material nonpublic information. It would not violate Regulation FD to reveal this type of data even if, when added to the analyst’s own fund of knowledge, it is used to construct his or her ultimate judgments about the issuer. An issuer may not, however, use the discussion of an analyst’s model as a vehicle for selectively communicating — either expressly or in code — material nonpublic information. [Aug. 14, 2009]
Question 101.04

Question: May an issuer provide material nonpublic information to analysts as long as the analysts expressly agree to maintain confidentiality until the information is public?

Answer: Yes. [Aug. 14, 2009]

Question 101.05

Question: If an issuer gets an agreement to maintain material nonpublic information in confidence, must it also get the additional statement that the recipient agrees not to trade on the information in order to rely on the exclusion in Rule 100(b)(2)(ii) of Regulation FD?

Answer: No. An express agreement to maintain the information in confidence is sufficient. If a recipient of material nonpublic information subject to such a confidentiality agreement trades or advises others to trade, he or she could face insider trading liability. [Aug. 14, 2009]

Question 101.06

Question: If an issuer wishes to rely on the confidentiality agreement exclusion of Regulation FD, is it sufficient to get an acknowledgment that the recipient of the material nonpublic information will not use the information in violation of the federal securities laws?

Answer: No. The recipient must expressly agree to keep the information confidential. [Aug. 14, 2009]

Question 101.07

Question: Must road show materials in connection with a registered public offering be disclosed under Regulation FD?

Answer: Any disclosure made “in connection with” a registered public offering of the type excluded from Regulation FD is not subject to Regulation FD. That includes road shows in those offerings. All other road shows are subject to Regulation FD in the absence of another applicable exclusion from Regulation FD. For example, a disclosure in a road show in an unregistered offering is subject to Regulation FD. Also, a disclosure in a road show made while the issuer is not in registration and is not otherwise engaged in a securities offering is subject to Regulation FD. If, however, those who receive road show information expressly agree to keep the material nonpublic information confidential, disclosure to them is not subject to Regulation FD. [Aug. 14, 2009]

Question 101.08

Question: A publicly traded company has decided to conduct a private placement of shares and then subsequently register the resale by those shareholders on a Form S-3 registration statement. The company and its investment bankers conduct mini-road shows over a three-day period during the private placement. Does the resale registration statement filed after completion of the private placement affect whether disclosure at the road shows is covered by Regulation FD?

Answer: No. The road shows are made in connection with an offering by the issuer that is not registered (i.e., the private placement), regardless of whether a registration statement is later filed for an offering by those who purchased in the private placement. [Aug. 14, 2009]

Question 101.09

Question: Can an issuer disclose material nonpublic information to its employees (who may also be shareholders) without making public disclosure of the information?

Answer: Yes. Rule 100(b)(1) states that Regulation FD applies to disclosures made to “any person outside the issuer.” Regulation FD does not apply to communications of confidential information to employees of the issuer. An issuer’s officers, directors, and other employees are subject to duties of trust and confidence and face insider trading liability if they trade or tip. [Aug. 14, 2009]

Question 101.10

Question: If an issuer has a policy that limits which senior officials are authorized to speak to persons enumerated in Rule 100(b)(1)(i) – (b)(1)(iv), will disclosures by senior officials not authorized to speak under the policy be subject to Regulation FD?

Answer: No. Selective disclosures of material nonpublic information by senior officials not authorized to speak to enumerated persons are made in breach of a duty of trust or confidence to the issuer and are not covered by Regulation FD. Such disclosures may, however, trigger liability under existing insider trading law. [Aug. 14, 2009]

Section 102. Rule 101: Definitions

Question 102.01

Question: If an issuer wants to make public disclosure of material nonpublic information under Regulation FD by means of a conference call, what information must the issuer provide in the notice and how far in advance should notice be given?

Answer: An adequate advance notice under Regulation FD must include the date, time, subject matter and call-in information for the conference call. Issuers also should consider the following non-exclusive factors in determining what constitutes adequate advance notice of a conference call:

• Timing: Public notice should be provided a reasonable period of time ahead of the conference call. For example, for a quarterly earnings announcement that the issuer makes on a regular basis, notice of several days would be reasonable. We recognize, however, that the period of notice may be shorter when unexpected events occur and the information is critical or time sensitive.
• Availability: If a transcript or re-play of the conference call will be available after it has occurred, for instance via the issuer’s website, we encourage issuers to indicate in the notice how, and for how long, such a record will be available to the public. [Aug. 14, 2009]

Question 102.02

Question: Could an Exchange Act filing other than a Form 8-K, such as a Form 10-Q or proxy statement, constitute public disclosure?

Answer: Yes. In general, including information in a document publicly filed on EDGAR with the SEC within the time frames that Regulation FD requires would satisfy the rule. In considering whether that disclosure is sufficient, however, companies must take care to bring the disclosure to the attention of readers of the document, must not bury the information, and must not make the disclosure in a piecemeal fashion throughout the filing. [Aug. 14, 2009]

Question 102.03

Question: For purposes of Regulation FD, must an issuer wait some period of time after making a filing or furnishing a report on EDGAR that complies with the Exchange Act before making disclosure of the same information in a non-public meeting?

Answer: Prior to making disclosure of this information in a non-public meeting, the issuer need only confirm that the filing or furnished report has been accepted for filing on EDGAR and is publicly available on EDGAR. [Aug. 14, 2009]

Question 102.04

Question: During a nonpublic meeting with analysts, an issuer’s CEO provides material nonpublic information on a subject she had not planned to cover. Although the CEO had not planned to disclose this information when she entered the meeting, after hearing the direction of the discussion, she decided to provide it, knowing that the information was material and nonpublic. Would this be considered an intentional disclosure that violated Regulation FD because no simultaneous public disclosure was made?

Answer: Yes. A disclosure is “intentional” under Rule 101(a) when the person making it either knows, or is reckless in not knowing, that the information he or she is communicating is both material and nonpublic. In this example, the CEO knew that the information was material and nonpublic, so the disclosure was intentional, even though she did not originally plan to make it. [Aug. 14, 2009]

Question 102.05

Question: Can an issuer satisfy Regulation FD’s public disclosure requirement by disclosing material nonpublic information in a speech at a shareholder meeting open to the public? The meeting will not be covered by the press, or webcast or broadcast by any electronic means.

Answer: No. Under Rule 101(e), public disclosure of information required to be disclosed by Rule 100(a) can be made either by furnishing or filing with the Commission a Form 8-K disclosing that information, or by disseminating the information through another method or combination of methods of disclosure “that is reasonably designed to provide broad, non-exclusionary distribution of the information to the public.” A meeting that is open to the public but not otherwise webcast or broadcast by any electronic means is not a method of disclosure “reasonably designed to provide broad, non-exclusionary distribution of the information to the public.” [Aug. 14, 2009]

Question 102.06

Question: Does the mere presence of the press at an otherwise non-public meeting attended by persons outside the issuer described in paragraph (b)(1) of Rule 100 under Regulation FD render the meeting public for purposes of Regulation FD?

Answer: No. [Aug. 14, 2009]

Question 102.07

Question: What are the circumstances under which information posted on a company web site (whether by or on behalf of such company) would be considered “public” for purposes of evaluating the (1) applicability of Regulation FD to subsequent private discussions or disclosure of the posted information and (2) satisfaction of Regulation FD’s “public disclosure” requirement?

Answer: The Commission has provided guidance on both of these questions in its interpretive release, “Commission Guidance on the Use of Company Web Sites,” Exchange Act Release No. 58288 (Aug. 1, 2008). [Aug. 14, 2009]

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Instead some are taking steps to transition and ensure that they can meet the SEC’ s criteria (which contrary to what some people would have you believe, doesn’t mean you can just bury information in the bowels of your site and never tell a soul).

So for those of you who take comfort in knowing that others have gone before you, here’s a bit of news on some who are leading the way as well as thoughts on how to improve their approach:

BGC Partners, Inc. (Nasdaq: BGCP) is a global inter-dealer brokerage firm who on Tuesday issued the following announcement .  In compliance with the U.S. Securities and Exchange Commission’s recent guidance regarding  notice-and-access news releases, the company plans to discontinue issuance of full-text financial news releases via a wire service and will issue only advisory press releases notifying investors when new and material information is available on its websites.  (Part of the transition I referred to earlier, is the use of notice-and-access news releases.)

Coupled with this, BGC also offers RSS feeds and email alerts to push information out to interested subscribers (who don’t have to keep checking back on their web site  another myth). That said, BGC has made reference to their web sites where the full text release will be posted, but the links they provide are not active.

Dominic Jones of IR Web Report expresses a few other concerns regarding BGC’s readiness, mainly regarding the limitations of IR web site template solutions, and specifially the Thomson Reuters platform:

• the Thomson platform does not include time-stamping or a change log
• RSS feeds included faulty time stamps
• there was no way for issuers to post content to go live at a precise time – they would have to do this manually

Previously on our blog I made mention of Q4 WEB’s comprehensive, time-stamped and easily searchable record and how it differs from other market offerings. Had BGC been using our product, these issues would not exist.

Dominic also twittered about a few other companies who have been making use of notice-and-access releases for some time, Dundee Wealth here’s an example from their November 16, 2006 Q3 results. And of course my favourite, Warren Buffet’s Berkshire Hathaway , parent company of Business Wire.

Further along the continuum in web disclosure, General Motors announced on its global media web site that it was cutting 10,000 jobs. Although Robert MacMillan of Reuters felt that the information should have been distributed through a newswire, rather than just release it on a “company web site”,  he failed to check his facts on just how widely GM’s media site is followed . I spoke with Tom Wilkinson, GM’s Director of News Relations regarding the release. He said that “most of the big automotive companies have media sites that are widely followed by analysts and news journalists, and that GM has been issuing news through its media site for more than 10 years.’ In addiition to posting the information on their site, they also disseminated it through email alerts and RSS feeds to thousands of subscribers. Tom said, “we released the information this way because we were confident that with our following, the information would get out to the market quickly”.

And it did. Within minutes it was on major news portals, twitter and auto enthusiast websites. It was picked up by all the major papers and news broadcasters So, the real point isn’t whether you use a newswire but rather, if your company is widely followed and the topic is newsworthy, it will get picked up – which is exactly why the SEC recognized the need to issue new guidance.

The lesson from GM is that what’s needed to aid news dissemination is to get people to follow you. This supports the importance of building a subscriber base and transitioning to a web disclosure model over time, while you use notice-and-access releases and other methods to let the market know where you disclose your information, and how they can receive automatic updates.

Nobody said that an effective web disclosure model was going to happen overnight but the tide is beginning to turn. Stay tuned!

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