Equity Group Survey Finds Securities Attorneys Favor Wire Services over Corporate Web Sites for Disclosure of Material News

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A recent survey conducted by The Equity Group Inc. found that the overwhelming majority of securities attorneys polled favor the continued use of news wire services versus corporate web sites to achieve broad based dissemination of, and simultaneous access to, company news.

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Does posting a news release on a company's web site satisfy Reg FD? We concluded that attorneys generally don't want clients to be test cases, and await further clarification from the SEC before recommending any changes to companies' disclosure policies.

The survey was undertaken by the 35 year-old, New York City-based investor relations consultancy in response to the SEC's August 2008 guidance regarding the use of corporate web sites for information disclosure to satisfy Regulation Fair Disclosure ("Reg FD"). According to the SEC's Commission Guidance on the Use of Company Web Sites, companies may disclose information via their web sites, but to satisfy Reg FD: (i) the web site must be a recognized channel of distribution; and (ii) the companies must effectively disseminate the information to investors, which involves how the information is posted and the accessibility of the site. (Click here for the SEC's complete guidance: http://www.sec.gov/rules/interp/2007/34-58288fr.pdf)

Robert D. Goldstein, President of The Equity Group, stated, "The attorneys we queried reached similar conclusions while expressing a number of concerns. Some wondered if it would be difficult for a company to assess whether its web site is, in fact, a recognized channel of distribution. Moreover, how could a company that employed its web site as the primary distribution channel for material news determine if that information is being effectively disseminated to investors? Several attorneys pointed to the potential for fraudulent web site postings, while others cited weather and technical issues that might disrupt the posting of news or hinder its access."

Mr. Goldstein also noted, "In some cases, according to the attorneys we spoke with, there are conflicts between the August 2008 guidance issued by the SEC and rules set forth by the New York Stock Exchange and Nasdaq Stock Market. One attorney also mentioned that from an investor standpoint, he is accustomed to retrieving news from one financial web site on all the companies in which he is invested, and doesn't favor visiting multiple corporate web sites to obtain this information."

In closing, Mr. Goldstein said, "Does posting a news release on a company's web site satisfy Reg FD? We concluded that attorneys generally don't want clients to be test cases, and await further clarification from the SEC before recommending any changes to companies' disclosure policies."

About The Equity Group

Founded in 1974, The Equity Group provides a full range of investor relations services, principally for micro through mid-cap companies. Services include investment community outreach; writing/editorial services (news releases, roadshow presentations, corporate profiles, conference call scripts and Annual Reports); strategic consulting; crisis management; web IR; and generally elevating the public profile of client companies. To learn more about The Equity Group and its clients, visit http://www.theequitygroup.com.

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Loren G. Mortman
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