Risk & Compliance

SEC Advice Ahead for Web-posting Results

Pushing for use of innovative technologies, it votes to issue a set of guidelines for disseminating financials online.
Kate PlourdJuly 30, 2008

Recognizing how eight years of advances in internet technology have changed things, the Securities and Exchange Commission unanimously voted to provide companies with a new set of guidelines covering how to disseminate investor information on the company Web site.

The last time the SEC issued guidance for disseminating investor information via Web was in 2000, and called for sterner limits on Web distribution of information.

Companies now will be permitted, under certain circumstances, to distribute investor information via Web sites exclusively — instead of through a system limited to SEC filings and widely distributed news releases. The guidelines are intended to help investor relations in using that less-understood manner of dissemination.

They also clarify how the antifraud provisions apply to statements made by the company — or a person acting on the company’s behalf — in blogs and electronic shareholder forums. And they explain that companies cannot require investors to waive protections under the federal securities laws as a condition of participating in a blog or electronic shareholder forum.

Commissioner Christopher Cox, along with John White, director of the SEC’s Division of Corporation Finance, said in a public meeting today that they hoped the guidance would help make corporate Web sites more than just “filing cabinets for public documents,” leadin instead to use of innovative and creative technology for presenting company information online.

“It’s a better way to provide information to investors, because today it can be presented in an interactive format that allows each individual to click through or drill down to the level appropriate to him or her,” said Cox. “We recognize that allowing companies to present data in ways different from our current forms and in more technologically advanced ways than Edgar can be a significant help to investors.” Edgar is the SEC’s system of Electronic Data Gathering, Analysis, and Retrieval.

Cox outlined four areas that the new guidelines will address. The first involves explaining how company information posted on the corporate Web site could be considered public under the Regulation Financial Disclosure rule. Another area relates to corporate liability for different types of electronic disclosure, proposing advice, for example, about how to hyperlink to third-party information or Web sites without having to adopt the third party’s content. That second area also lays out directions for providing access to historical or archived data, along with summary information.

The third aspect, said Cox, involves helping explain that the information would not generally be subject to rules under the Sarbanes-Oxley Act relating to a company’s disclosure controls and procedures. Finally, the guidelines detail how the information a company posts online doesn’t have to be in a printable format, unless other rules require that.

At the meeting, White said that the first regulation, regarding Regulation FD, was important especially for companies with corporate blogs. “Certainly, it would be a good practice if a company had processes in place for monitoring what was going on their Web site,” he said.

White also said he expects to see more user-friendly interactive company Web sites, and that there should be less use in the future of 8-k reports for disclosure.