SEC releases new guidelines on public disclosure

Some important news for publicly quoted companies came out recently. The US Securities and Exchange Commission (SEC) released a speech that they are planning to issue guidance on how companies can use their web sites to provide information to investors in compliance with the federal securities laws. This is great news for quoted companies who are spending lots of money in getting their investor news out through news wire services under the SEC's Fair Disclosure Regulation. Under certain criteria the SEC will permit these companies to disclose news only through their websites including blogs and social media! This could potentially by the tipping point for corporate websites and blogs as a tool to communicate with investors. The SEC began studying the issue in late 2006 after Sun Microsystems CEO Jonathan Schwartz called the news release requirements an “anachronism.”

The interpretive guidance addresses four main topics:

1. When information posted on a company web site is “public” for purposes of the applicability of Regulation FD;

2. Company liability for information on company web sites – including previously posted information, third-party hyperlinks, summary information and the content of interactive web sites;

3. The types of controls and procedures advisable with respect to such information; and

4. The format of information presented on a company web site, with the focus on readability, not printability.

The 4th point is actually very interesting, as most investor relations websites currently just publish information in a form that resembles the printable forms they use for releasing to PR news wires (usually in the form of downloadable PDF's). It will be interesting to see how investor relations websites and blogs will change now that the SEC has said that the form of this information has to focus on readability and not printability. The SEC has not yet released full details yet.