SEC Chair Suggests Blogs are OK for REG FD
A month ago, Sun CEO Jonathan Schwartz posted on his blog about how he was petitioning the SEC for clarification on fair disclosure rules.
As IR people know, REG FD is designed so that companies that have “material” news need to disclose it equally and fairly so that no one person or organization has an advantage (i.e., can trade on the information) without others being able to find the same info. Schwartz was complaining that the REG FD required them to do a combination of things such as a press release or a conference call, when a simple blog post might suffice.
Of course, the regulations which took effect on October 23, 2000, have never been that clear, as they seem to basically say that adequate disclosure may depend on the method, but there’s no set of things you must do. In other words, it’s not entirely clear what kind of clarification can be made since it seems like the issue has little to do with the form in which the info is released, but whether or not whatever form it is is accessible and likely to be seen by enough people.
SEC Chairman Christopher Cox has responded by suggesting that sure, blogs could be okay if they are clearly going to be seen and accessible, the press has turned this into a “blog” issue, about how blogs can be used for disclosure.
However, that’s not quite right and it’s not what the SEC indicated. What they basically said was that the medium doesn’t matter, the impact does. In the case of Sun, Jonathan Schwartz’s blog is widely read by the press — and thus, if he makes a statement, it will get picked up rapidly (as this very story did!).
So, it makes sense that a blog post from him (in combination with other disclosure methods) is perfectly fine. However, for the IR person at a public company with a blog no one reads, it’s clearly not at all sufficient. In the end, this isn’t a blog issue at all. The medium has nothing to do with it — only the likelihood of the disclosure being noticed and accessible to all.
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