Almost two years ago, our CEO and I had a discussion in which he challenged some of the legal restrictions placed on him concerning blogging about Sun’s financial results and more generally about use of Sun’s IR website. He very convincingly pointed out that these restrictions were inconsistent with the objectives of Reg FD. That conversation resulted in a blog, an unexpected response from SEC Commissioner Cox and an invitation for several of us to meet in Washington with members of the SEC.
It was my first time at that institution and my visit had a Capraesque feel to it. But, the attorneys on the Commissioner’s team were intelligent, engaged and receptive. Clearly they listened to us and many other reporting companies as indicated by the SEC’s recently released interpretive guidance on the use of company websites under the Securities Exchange Act of 1934. You can find a PDF of it here.
When Reg FD was first adopted eight years ago, the SEC took the position that website disclosures alone would not be viewed as meeting the public disclosure requirements of the regulation. Since then the U.S. has seen explosive growth of internet access. With it’s latest release, the SEC has recognized this growth by making clear that depending on the circumstances website disclosures can meet the public disclosure requirements of Reg FD.
While the release does not provide much in the way of objective standards, it is not surprising that the SEC was reluctant to provide a “bright-line” test given the differences in size, market following and web infrastructure among reporting companies. However, absent that clarity, the Commission did give pragmatic guidance on factors a company should evaluate in considering whether it’s use of website disclosures are Reg FD complaint. These include the extent to which a company :
-Informs the market of the company’s website practices;
-Establishes a pattern of regular website disclosures;
-Makes the disclosures prominent;
-Takes steps to increase market and media attention to the website;
-Makes the website accessible through RSS feeds and similar technologies;
-Keeps the website current and accurate; and
-Uses the website as a predominant method for public disclosure.
(The nature of the information disclosed is obviously a significant factor as well.)
It was also nice to see that we have already incorporated much of this guidance in Sun’s disclosure process and website. To see what it looks like go here.