Dispelling myths about Reg FD & Web Disclosure

24 October 2008

By Darrell Heaps



The other day I came across a Tweet from Tom Becktold at BusinessWire:

becktold From IR Magazine: Perils in relying on company website as primary channel http://tinyurl.com/6qnlx9 about 3 hours ago from web

I’m always interested to see what IR Magazine has to say so I checked it out. I was disappointed to see the article was based on a “study” from The Equity Group that says the majority of security lawyers don’t support web-site disclosure. I dug in more and found the press release that the article was based on

Here are a couple of key things to note…

The Equity Group was commissioned by someone to conduct this study. They spoke to 15 security lawyers and used this as their sample, which according to research experts , falls well below what would be required to represent the full population of US securities lawyers. In addition, no information was given as to the nature of the survey – which as it turns out, was actually a poll. Personally I would love to see what the actual questions in the poll are.

According to the Equity Group, an ‘overwhelming majority’ are against web disclosure. In addition to the problems associated with the sample size and the ‘survey’ itself, let’s take a look at some of the ‘problems’ the article identifies with respect to the Reg. FD web disclosure model:

Potential fraudulent web postings – fraudulent web postings are a serious issue on their own. All companies must consider this liability when dealing with their web site in general. This is not a web disclosure issue. The reality is that companies must have controls in place to ensure their web sites never contain any type of fraud.

Technical glitches disrupting access to news –   is this saying that the company web site, RSS feeds, email alerts, content aggregators etc. all happen to not work simultaneously for some reason? Meaning the issuer’s site could not act as a recognized channel of disclosure? This broad non-descript fear statement, “some type of glitch may happen and the information isn’t accessible”, is irresponsible. The naysayers to web disclosure should step up and explain why companies can’t easily have web sites that are always available, when every other industry easily achieves this. 

SEC guidance squaring exactly with NYSE and NASDAQ rules – this is legitimate and something that the SEC needs to address. Paving the way for new regulation is expected to require some discussion with exchanges – it certainly isn’t an insurmountable road block.

Investors have come to expect to look in central places for financial news and don’t want to visit a number of corporate websites. – Web disclosure is not about having to visit each issuer’s web site to get information! It is about allowing companies to use their web site and all available technologies (Blogs, RSS, Email, Social Networks) to distribute their information to the market.

Positioning web disclosure as the requirement to “visit every company’s web site”, is a deliberate attempt to confuse the market and it is irresponsible for The Equity Group and whoever commissioned this “poll of securities lawyers” to continue to position the option of web disclosure as such.

On this note, the rest of the world’s information now utilizes the web and all of these technologies to communicate and distribute information around the globe. This study’s description of web disclosure is based on what the web was in the late 90s, and we’ve come a long way since then.

Goldstein said, ‘We concluded that attorneys generally don’t want clients to be test cases.” So based on the 15 lawyers you spoke to and asked if they’d rather visit a web site, or get their news delivered to them, the overwhelming majority chose newswires. (I’m paraphrasing, but I’d love to see the so-called “poll” questions). So, is that like 10? or 12? And from the 12 who said they’d prefer newswires, you can draw a market conclusion that no one wants to be a test case? Again, this is an obvious research piece created to scare the market into not changing.

The bottom line is that companies should not have to pay to disclose information to the market when the Internet provides this capability for free. Corporate disclosure is what the market requires to make decisions. In order to have the healthiest, most efficient market, there must be a high level of direct transparency between a company and its stakeholders.

This is why the SEC made the changes to RegFD in the first place.

The SEC has recognized that the way public companies disclose information today is trailing way behind how the rest of the world uses the Internet. It’s that simple. The SEC has opened a doorway that allows issuers to fully leverage the accessibility, reach and immediacy of the Internet. This opens the doorway to save issuers 100’s of thousands of dollars – which makes more sense then ever in today’s tough economic climate.

If you’re a smart IRO looking for a way to save your company a lot of money (particularly in this down market), then web disclosure is what you should be most interested in for 2009. You owe it to yourself and your company to investigate this fully and get the straight goods.

Please comment or email me and let me know if you come across any other FUD (fear, uncertainly and doubt) tactics out there in the market. We’ll work to call them out here.  



Tom Becktold

11 years ago


Hey Darrell,

Thanks for the opportunity to comment.

While Business Wire clearly sees that companies can and should do more to leverage web technologies to further their transparency efforts, we stand firm on the need for broad-based simultaneous disclosure of market-moving news.

Website posting, blogs, email and RSS feeds do not provide split-second simultaneous delivery of news to a wide range of information sources. They are dependent on a whole host of factors from which scraper is being used for an RSS feed and how often it scrapes a site, to they myriad issues with email delivery, to the single platform of posting to just a company website. Our network does provide simultaneous delivery via a patented system. It’s bidirectional and provides an audit trail.

It’s clear that, to most market participants, knowing that they’ve received news simultaneously to others is vital in creating a level playing field for all, whether they access their news via Yahoo! Finance, Bloomberg, the company’s web site or any of thousands of other sources they may already be using that receive Business Wire’s feed.

Tom Becktold
SVP, Marketing
Business Wire

Darrell Heaps

11 years ago


Hi Tom, thanks for the comment.

I guess the point here is that email alerts, RSS and things like Twitter are used today by the bulk of end users to be notified of news. Whether on the BW site, Yahoo!, Google, Twitter or the 1000s of sites out there – people subscribe to email alerts, RSS feeds and social networks like Twitter to get their information. The reality is that the majority of people don’t visit web sites on their own anymore – they get notified by various methods and then click a link. So although the BW network gets the news to the aggregators, they (and BW themselves) then use these web technologies to notify end users.

So the question is – if it’s good enough for BW and the aggregators to deliver news in this way why can’t the company provide the same directly?

On this note, aggregators are quick to adapt and have already changed their sites to allow for blog content (updated by RSS) to be displayed right alongside press releases (check out Yahoo!Finance or Google Finance). Another great example of the change taking place is to look at the next generation Bloomberg’s in the market like FirstRain, Kapow, InfoGen and SkyGrid. These services obtain, analyze and index research from the web in real-time. Very soon Bloomberg will follow suit to stay relevant.

One way that BW and others could help in the transition would be to recognize notice and access (N&A) press releases as an acceptable hybrid. It’s going to take some time for web disclosure to be adopted by the mass market, during this time N&A is a great way for issuers to leverage the benefits of both systems.

Dominic Jones

11 years ago


Yes, why won’t Business Wire distribute a notice telling investors that a company has posted information on its website with a link to the information?

This approach is permitted for Business Wire’s owner Berkshire Hathaway, but the company won’t do the same for it’s clients.

By forcing its clients to issue full text releases, Business Wire is ensuring that investors have no incentive to visit companies’ websites, which in turn prevents company websites from being a “recognized channel” for disclosure.

I think I’ve answered my own question. It’s not in Business Wire’s interests for investors to access information anywhere other than through Business Wire.

Tom Becktold, Business Wire

11 years ago


Hi Darrell,

In fact, Business Wire has to serve corporations and multiple audiences that move financial markets. That means addressing all of their varying needs to ensure an efficient flow of information. As such, we built and patented our own delviery network, called “NX” that we’ve installed at disclosure points, aggregators and financial information sites to ensure to-the-second simultaeous delivery of market-moving corporate news. That’s an investment of millions of dollars to move ever-more sophisticated content. Our clients and audiences demand it.

The wide ranges of audiences we reach include investors that may not be familiar with RSS feeds (I know my folks don’t pass that test) as well as professional investor services, that require rich tagged material to parse into their systems. Notice-and-access doesn’t provide the content or speed they need to serve their needs.

So while some may have the luxury to advocate for one specific audience or platform, Business Wire must serve a wide range of needs – all of which are important in our capital markets. We have technology that frankly, if it didn’t exist, would be created to serve the need we successfuly fill.

Darrell Heaps

11 years ago


Hi Tom,

Thanks for the further insight.

For me it comes down to a question of what a company’s rights are. The SEC guidance provides the ability for companies to use all available technologies to disclose information to their stakeholders (as long as the 3 criteria are met).

As companies begin to make new choices, aggregators, corporations and professional investors will quickly adapt to consume this information. As I mentioned in my previous comment, look at Yahoo and Google along with the next-gen Bloomberg companies for evidence of this.

I also challenge the idea that corporate end-users do not already rely heavily on the Web and related Internet technologies to drive their investment/trading strategies. The days of relying on one source for information are no longer.

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