Interesting developments recently on the public company material disclosure front.
Sun CEO Jonathan Schwartz has been pretty vocal that he believes blogs and Web sites are better than "anachronistic" vehicles like press releases and conference calls to broadly disseminate material information. He recently wrote a letter to SEC Chair Christopher Cox asking for clarification of Regulation FD (Fair Disclosure), the rule that requires disclosure methods to be "reasonably designed to provide broad, non-exclusionary distribution of the information to the public."
Cox’s reply, posted in a comment to another post on Schwartz’s blog a little over a week ago, indicates that the SEC is open to the idea:
"The Commission encourages the use of websites as a source of information to the market and investors, and we welcome your offer to further discuss with us your views in this area. Assuming that the Commission were to embrace your suggestion that the "widespread dissemination" requirement of Regulation FD can be satisfied through web disclosure, among the questions that would need to be addressed is whether there exist effective means to guarantee that a corporation uses its website in ways that assure broad non-exclusionary access, and the extent to which a determination that particular methods are effective in that regard depends on the particular facts." (emphasis mine)
In other words, does the site have a broad reach? Is it open to all? And most importantly, is it GENERALLY true, not just specifically true in certain instances.
This last is the key one, in my opinion. Sure, Sun’s site and Jonathan’s blog are widely read, and would likely qualify under the FD Regulation. But in order for web disclosure to become a rule, it would have to be generally and broadly true for all public companies, not just some. That’s the much harder test.
So, don’t cancel your PR Newswire or BusinessWire accounts just yet, folks. I suspect we are going to need the old, beleagured press release for a bit longer.
- Schwartz is a fellow alum of Wesleyan University.
Today is the 2d birthday (anniversary) of this blog.