Mark Hynes - thoughts on corporate disclosure

Opinions on changing rules, changing best practices, and their effect on investor relations officers.

Thursday, August 07, 2008

Corporate website posting for disclosure compliance?

The SEC has issued a guidance document helping companies decide whether their current disclosure distribution strategies are appropriate.

My Collins English dictionary defines guidance as “Leadership, instruction or direction”. (It also has the flight path of a guided missile; perhaps that is more appropriate)?

So the question is whether the SEC guidance helps or hinders, or provides the guidance needed by different communities.

First the good news. The fact that the debate is going on, and the attempt to provide clarity is terrific. It is without question that electronic distribution lies at the heart of today’s disclosure world. By identifying that the SEC has done a service.

It is also good that IRO’s spend time thinking about the full process of their disclosures; so often it is tempting to say “same as last quarter”. And in these days of having to fight for every investment pound, Euro or dollar, I will always argue that good disclosure is simply the best.

However there are concerns as to whether the SEC document sheds heat or light. After 40 years (yes its true!) in the financial services information business, from paper tape to the web, I believe * that best way to harness the full power of the internet, rather than just one tiny part of it (the corporate website or blog), is through technology, which can reach - in the words of the Heineken ads - parts that other means cannot reach.

• And for good disclosure I argue that as an individual not with my PR Newswire affiliation.

For all its benefits, the SEC document will not help all.

Public companies will struggle to find clarity in whether a sole website posting (and EDGAR filing) satisfies Reg FD. There are many IF’s.

Institutional investors and analysts will worry that their datafeeds will miss news from some companies, to their disadvantage.

Retail investors relying on tickers not URL’s will worry that their favourite Yahoo Finance or Google Finance site will miss news.

And the news vendors such as Reuters, Bloomberg and others will worry that their editorial processes may not be as comprehensive or as fast as before.

Meanwhile it is a step away from the growing coherence between EU and US corporate disclosure practices, which have been growing ever closer. Transparency Matters understands from EU regulators that there is currently no review to move away from current EU compliance obligations – the PIP/SIP system.

More to come I suspect!


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