Christopher Cox, head of the Securities and Exchange Commission, recently posted in the discussion thread attached to Sun CEO Jonathan Schwartz’s blog. The posting was in response to a letter Schwartz had written (and made available on his blog) more than a month ago, asking if the SEC would be willing to update “Regulation Fair Disclosure” to allow companies to first share corporate information over the Web. Cox’s response: let’s talk about it.
RegFD, as the rule is known, was designed to ensure that no one gets preferential access to important corporate information. It requires that earnings reports, merger announcements, and the like are publicly reported to numerous outlets at the same time, usually through a conference call or press release. Schwartz wants company websites and corporate blogs to count as public reports, and he argues that the traditional outlets for such corporate information have had their day.
“It is our view that proprietary news outlets are insufficiently accessible to the broad majority of Internet users and individual shareholders,” he wrote in a September 25 letter to Cox. “It is certainly the case that the Internet represents a broader user base than those able to afford subscriptions to traditional forms of media and thus usage of this or any other freely available company blog or website should be considered sufficient in satisfying the objectives of Regulation Fair Disclosure.”
Cox responded last week, posting a copy of his return letter to Schwartz in a discussion thread on Schwartz’s blog. He points out that companies are increasingly putting their information online, and notes that most of this is already allowed by the government. “Indeed, because information that is not ‘selectively disclosed’ or that is not material nonpublic information is not subject to the public dissemination provisions of Regulation FD, Sun and other public companies can already do this without implicating the provisions of Regulation FD,” Cox wrote.
Important corporate details need to satisfy a “widespread dissemination” requirement of the regulation, and Cox expressed his willingness to discuss the issue of whether publication to the Web should count. Before the SEC could sign off on such a plan, it would have to adopt rules designed to ensure that important bits of information are not released onto obscure webpages that only insiders know about or made available only to users of certain browsers.