It's been nearly 20 years since Tim Berners-Lee created the World Wide Web, and at least a decade since the first blogs appeared. But until now, publicly traded companies have not been able to use the Web or blogs to meet the Feds' disclosure requirements.
The U.S. Securities and Exchange Commission this week finally woke up to the fact that the Internet already has become an alternative to the traditional press release, and announced that a company's Web site can qualify for an alternative "channel of distribution."
Companies still must follow certain rules, the details of which have not yet been posted to the SEC's Web site. But SEC Chairman Chris Cox seems inclined to make them reasonable. An excerpt from his remarks compiled by IRWebReport.com:
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 Web sites 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.
Although the final rules aren't out, there are some intriguing hints about what they might include. One SEC statement says that "information appearing on company Web sites does not need to satisfy a printer-friendly standard or be in a format comparable to paper-based information, unless the commission's rules explicitly require it." Translated: that could mean video and audio releases are acceptable as well.
This is a victory for Sun Microsystems CEO Jonathan Schwartz, who had been pressing the SEC to do just this. Schwartz wrote a letter to Cox in March 2007 saying there were ways to rewrite what's called Regulation FD--which dates back to 2000--to make it work for the Web. He was right.