CEO blogger says SEC should allow online disclosure

I probably shouldn’t be calling out a guy whose blog and corporate js_blog_header_en.jpgwebsite combine for a million hits a day. I mean, who the hell am I? But Johnathan Schwartz, the blogging CEO of Sun Microsystems, has really stepped in it this time.

Schwartz is proposing that the Securities Exchange Commission rewrite Reg FD, the rule designed to assure “fair disclosure” of information that might impact the selling price of a company’s stock. SEC regs are pretty stringent, forcing companies through a deliberate process of news disclosure. Schwartz finds Reg FD a bit out of step with our wired world. His take:

“In order to be deemed compliant (with Reg FD), if we have material news to disclose, we have to hold an anachronistic telephonic conference call, or issue an equivalently anachronistic press release, so that the (not so anachronistic) Wall Street Journal can disseminate the news. I would argue that none of those routes are as accessible to the general public as this blog, or Sun’s web site. Our blogs don’t require a subscription, or even registration, and are available to anyone, across the globe, with an internet connection. Simultaneously.”

I learned about Johnathan’s post from friend and blog consultant Dino Baskovic. His take:

“Sarb-Ox aside, I couldn’t disagree with Schwartz more…this loose cannon has spelled nothing but trouble for his company and its investors. Hello, people…it’s called fiduciary responsibility. I t’s the private equivalent of having the SEC chair blog about the open markets. An IR nightmare. Poppycock.”

Since Dino pretty much sums up my views, I won’t say more on that topic. But I do wonder what drives Schwartz to make such a proposal. I think it’s blogger ego.

I’ve only been blogging 30 days or so, but I’ve come to understand the “rush” of readership. My best day was 528 visits, a long way from a million. But if I had a million readers I day, I might come to believe the entire world was tuned in to my presence. It’s not.

I’ve noticed that some hardcore bloggers have a real smugness about their world — a belief that Web2 is the best way to connect to the world. That may be true, but most folks don’t agree.

A Gallup poll earlier this year said blog readership is flat and remains at the bottom of the list for most folks who access info online. That doesn’t mean blogs aren’t influential. They are. It simply means most folks don’t bother with blogs, and that means they can constitute fair disclosure.

Sometimes CEOs can lose sight of these things. That when the PR folks need to bring them back to reality.

So what Johnathan needs to hear from his PR people is that most of the world — investors included — isn’t sitting by awaiting his next RSS feed. And for the next few years at least, his PR staff will still have to send his material news the Wall Street Journal and PRNewswire.

It’s a small price to pay to keep the playing field level, don’t ya think? Much as we love this place, the blogosphere isn’t yet the mainstream. I’m OK with that.


2 Responses to CEO blogger says SEC should allow online disclosure

  1. All investors should have equal access to the same information. But it’s not a given that equal access is dependent on news releases.

    Many disclosures are scheduled well in advance and information is pushed out to the investor community. Some intermediaries aggregate upcomining events in public investor calendars. Companies offer email alerts and RSS that also push out the information. Consequently, anyone paying the slightest attention knows the date and time of scheduled disclosures. If they want it, they can get it at the same time as everyone else. There’s no barrier and no one has an intrinsic advantage. News releases are necessary for fairness in these situations, though they do not hurt except for the cost to shareholders.

    Important market moving news that isn’t scheduled does need to be pushed out in real time to the broadest possible audience. The accepted method is to use a newswire. Companies waste a lot of money providing full text releases when they could just include links back to their websites for investors to obtain the full text of the news. See here.

    But what if a company could replace the real time newswire distribution with a system that achieves the same or better distribution? And what if they didn’t just send news releases using it, but blog posts containing material information, site change notices, calendar updates, MP3 files etc. Surely, there would be no problem if that was done.

    I don’t know what Sun has in mind, but I do think that it is valid to question the value and efficiency of many current disclosure practices. Simply rejecting new ideas without looking at them more closely isn’t progress.

  2. Capitalist Academician says:

    I concur with Dominic – let’s not assume that the news media prints what we need them to. Going direct has some advantages. For example, we know who the holders of Bank of America stock are — why not communicate with them directly? We used to! With more than what, 125 million people online in the US now, isn’t it more likely that a posting on BofA’s website and an email to a shareholder distribution list would suffice? And let’s not forget that companies file an 8-K with the gummit — that winds up getting more ink, often, than the news release from the company.

    I agree, Bill, that there aren’t a lot of people waiting anxiously for the CEO’s next blog post, but surely the phenomenon of social media and its growth curve should make us curious, ne ces pas?

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