The US Securities and Exchange Commission (SEC) has announced new guidelines (available in the next week or two) that will recognize the role of blogs in disclosing investor-sensitive information to the public.
Back in 2005 I wrote an update on the situation at the time on investor relations and blogging, and in 2006 I delivered the keynote at the Australian Investor Relations Association on the Future of Investor Relations, and wrote about SUN Microsystem’s CEO Jonathan Schwartz’s initiatives for blogging to be a recognized form of investor disclosure.
The SEC appears to be moving ahead at a swift pace, despite cries from some, particularly in the news release business, that the old system shouldn’t be changed. In fact the comments below from SEC Chairman Christopher Cox come from a podcast, transcribed by IRWebReport:
Indeed, one of the key benefits of the Internet is that companies can make information available to investors quickly and in a cost-effective manner. The use of electronic media is arguably superior to providing company information the old way. It’s a better way to provide information to most investors since today it can be presented in interactive format that allows each individual to click through or drill down to the level of detail that’s appropriate to him or her.
The Internet has changed a lot since 2000 which was the last time the commission provided comprehensive guidance on this topic; the use of the Internet and electronic media. Back then the idea of the web as a social network was still being developed and websites such as MySpace, YouTube, LinkedIn and Facebook didn’t even exist. The idea of creating a social network where shareholders could meet and exchange views was barely imaginable. Blogs hadn’t really entered the public lexicon. And syndication technologies such as Atom and RSS were still in development.
The SEC started providing Twitter updates on its releases a couple of days ago now, which is a very practical way of letting people know about its information releases.
The details of how blogs are to be recognized for investor disclosure are yet to be released, however all the indications are that investor-sensitive information will be able to be released on blogs. As I’ve often said, this in fact is extremely logical, given both the truly egalitarian access to blogs and other online updates, and the intrinsically RSS-enabled format which means that news is available immediately to all who are interested.
It is very encouraging to see these moves. While on the one hand they are long overdue, the reality is that bureaucracy moves slowly, and if the details of the guidelines stack up, we will have a situation for far more egalitarian investor disclosure than before.
The most intruiging aspect of this is the potential impact on CEO and director blogging. No doubt compliance officers will be continuing to warn directors away from blogging. However CEOs and senior executives that truly wish to provide more detailed and up-to-date insights to investors and stakeholders have a ready platform to do so. We still have quarterly reporting and irregular changes of earnings guidance. However the recognition that investors are placing an increasing premium on transparency means that companies are gradually moving to provide relevant information quickly. It is now dead easy to do. Leading companies will start to use blogs actively in how they keep the markets informed.