On his blog, New Sun Microsystems CEO Jonathan Schwartz asked the SEC in November to let his company and others to disclose financial information on blogs. He believes that investors have a right to this information. Schwartz makes a good point and below is how he argued his position.
“I’ve been an officer of a public company for a while, and I’ve had access to confidential information for a good while longer. And I’m used to holding my tongue on issues that’d be deemed material to Sun’s financial performance. Like a pending acquisition or big sale, or data related to how our quarter’s going. In a public company, there are very strict laws surrounding how information’s disclosed.
So a couple years ago, when I first started blogging, I and our illustrious general counsel were far less worried about what I was saying, than where I was saying it. For example, I couldn’t use my blog to announce our quarterly performance, or disclose a material transaction. I had to use a press release, or a conference call (with a telephone operator, no less!).
Why? A regulation known as “Reg FD,” or Regulation Fair Disclosure – which attempts to ensure no one audience gets preferential access to material non-public information. It’s a great concept, designed to prevent selective disclosure, or actions that might advantage one investor over another.
Unfortunately, Reg FD doesn’t recognize the internet, or a blog, as the exclusive vehicle through which the public can be fairly informed. In order to be deemed compliant, 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 a 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.
Now we happen to have a like-minded Chairman at the United States Securities and Exchange Commission (the ‘SEC’), Christopher Cox. So Mike and I sent along a rather formal note last week, requesting a clarification to Reg FD, one that would permit our (and everyone else) using the internet (eg, a company blog or web site) to release material information. Without a press release or operator assisted conference call. We are, after all, the primary source of such material information – there’s no point in going through an intermediary if what we’re after is fair disclosure and full transparency. Let the light shine in, don’t buy a flashlight.”
Schwartz raises good points about how laws enacted pre-Internet and pre-blogging do not apply today. My word processing software does not even recognize the word “blog.” Transparency is critical to company credibility and reputation.
I have not heard whether Schwartz heard back from the SEC.
Blog, Jonathan Schwartz, New CEO, Sun Microsystems, SEC, Reg FD, financial disclosure, Christopher Cox, transparency, credibility, reputation