The Securities and Exchange Commission today voted unanimously to provide new guidance that allows public companies to use their Web sites and corporate blogs to meet Regulation FD's public disclosure requirements.
The guidance, which will be effective upon publication in the Federal Register, does imply that there are certain stipulations that public companies must meet in order to take full advantage of the guidance. And, as with any disclosure, the companies should tread carefully in determining what should be disclosed, where and how. No matter, this is definitely an advancement that positively impacts companies, investors and social media pundits.
According to the SEC's official statement, the SEC last issued guidance on the use of Web sites and electronic media in 2000 -- which is almost like decades ago in Internet years. The official statement from SEC chairman Christopher Cox said:
"The last time the SEC issued guidance in this area, the idea of 'social networks' hadn't yet been developed, and creating a social network where shareholders could meet and exchange views was barely imaginable," said SEC Chairman Christopher Cox. "Ongoing developments in technology have increased both the markets' and investors' demand for more timely company disclosure on the Web, and in turn, raised new securities law issues for public companies to consider. The guidance issued today clarifies the rules of the road so investors can gain — quickly and in a cost-effective manner — the benefits of Internet disclosure of the latest information on the companies they own or are considering buying."
Dominic Jones of the IR Web Report calls out that companies will have to use extreme caution when considering whether or not to leverage Web site copy or blogs to try and meet disclosure requirements. However, with this move forward by the SEC this could mean even more advances in terms of how public corporations use social media.
Many companies have long recognized that pushing out a traditional news release via a wire service (such as PR Newswire, Business Wire, Marketwire) is an almost antiquated approach to try to obtain news coverage. Simply, many have been forced to issue via news release only to meet Reg FD requirements. With the rising costs of commoditized basic news wire distribution (not to mention additional charges for public companies to meet Reg FD requirements) if leveraged cautiously public companies currently using this method could see some significant cost savings in their marketing budgets.
More than that, the social media news release (SMNR) that Brian Solis has spoken very publicly about has been caught in a bit of the crossfire between "old school" public relations and business professionals and the social media pushers who desire to make news releases more interactive. This guidance by the SEC could make the SNPR more relevant -- especially since it can be issued solely via corporate blog -- allowing marketing teams to even further cut back on spend via traditional wire services. As an aside, some of these wire services charge more for a SMNR than a traditional press release.
Bottom line? If used carefully, this new method of disclosure could be a boon for social media allies, as well as public company marketing budgets and Web presence alike. However, the wire services are likely going to suffer a bit of a loss.
Thanks to Shannon Whitley for alerting me to this news. For further reading, be sure to dig into the IR Web Report which includes current and ongoing in-depth analysis of the issue.