The Securities and Exchange Commission today approved new guidance for public companies’ communication with investors via websites, blogs and other Internet channels, a long-awaited update for investor relations officers and executives who last heard from the SEC on this topic in 2000.
The SEC press release provides a broad outline – and some further hints at the direction were provided in staff comments today – but details are in the interpretive release itself, which has not yet been posted on the SEC website. The commission promises clarification on several issues:
- Use of websites to comply with Regulation FD requirements. The SEC promises guidance on how companies may disseminate updates or material information online, without the well-worn ritual of issuing a press release to make information “public.” The interpretive release will go into particulars on how companies can evaluate whether (1) their websites are recognized channels of distribution, (2) posting online makes the information available to the marketplace in general, and (3) investors and the market have time to react to the information posted. Details will be of interest to IROs as well as PR staffs and vendors.
- Liability consequences of online financial communication. Specifics include corporate websites’ provision of data in historical archives (without considering an old news release or financial report “reissued” every time someone accesses it); links to third-party websites or reports (updating the SEC guidance on disclaimers to avoid “adopting” the other persons’ views for liability purposes); and summary or highlighted information (imagine a brief overview of financial reports, without rehashing all the notes and disclaimers in the 10-K).
- Blogs and online forums, a hot topic among IROs eager to interact with investors in a 21st-century way. The SEC affirms that antifraud provisions of the securities laws do apply to statements made by companies or persons acting on their behalf in these venues. (In my book, this is the only sensible approach.) And companies can’t force investors to waive protections as a condition of entering such a forum.
- Sarbanes-Oxley and the website. The guidance cuts companies a little slack by discussing boundaries so that not all information that might appear online (many company websites offer areas for marketing, recruiting and other purposes as well as investor info) is subject to Sarbanes-Oxley rules on disclosure controls and procedures.
- Cool graphics. The SEC gives the go-ahead to creative technologies that use video or interactive features but aren’t “printer-friendly.” Apparently it doesn’t have to be on paper to be disclosure.
It’s great that the SEC is responding to this need for clarity, following a recommendation from its Advisory Committee on Improvements to Financial Reporting. Companies will want to study the guidance to implement best practices, and stay legal, as investor relations enters the era of IR 2.0.