SEC Chairman Considering Blogs as Disclosure Vehicle

In response to a request referenced on his personal blog last month, suggesting that a company should be able to abide by US Securities and Exchange Commission requests for public disclosure of corporate statistics by posting that information to their blogs, Sun Microsystems CEO Jonathan Schwartz received an official disclosure of interest, if you will, directly from SEC Chairman Christopher Cox.

But a thorough read of Cox' five-paragraph response did not, despite reports, make any promises that the Commission will necessarily accept blog postings as acceptable media for public disclosure of company information.

Back in 2000, the SEC passed a set of fair disclosure regulations, now known as "Regulation FD," in an attempt to guarantee the general public open access to the same, formerly non-public information a company gives to an analyst. Essentially, if a company discloses something new to an analyst that the public has never seen before, Regulation FD says the company must also, in due course, inform the public itself.

"Unfortunately, Reg FD doesn't recognize the internet, or a blog, as the exclusive vehicle through which the public can be fairly informed," Sun's Schwartz wrote last month. "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."

Indeed, the SEC has been busy in recent days improving its specifications for how a phone conference must be conducted, who gets invited, how much notice is given in advance, and what qualifies as, per se, a "telephone."

As Schwartz continued, he wrote a formal request -- presumably using 20th century transcribing equipment -- to the SEC's Cox, asking for formal clarification regarding whether a blog can qualify for public disclosure.

Cox's response was apparently intended to be as news-breaking as Schwartz' original post, which was covered by Reuters last month. But as readers of the Sun CEO's blog noted today, Cox didn't exactly disclose what Schwartz may have wanted to see.

In fact, Cox avoids use of the term "blog" entirely, though he precedes his formal response with a personal note: "Since you're talking about transparency and efficiency in communications, I thought you might appreciate my taking advantage of the Internet's speed and potential for broad dissemination by posting here as well."

From there, it gets murky. "The Commission has recognized the importance of corporate websites and the Internet in providing important corporate information and developments to the market, both in connection with capital raising and disclosing ongoing corporate developments," Cox writes.

"Since Regulation FD was adopted in 2000, significant advances in information and telecommunications technology have occurred that have dramatically increased Internet use by businesses, consumers, investors, and government agencies. These advances have transformed the Internet into a primary means for the rapid dissemination and retrieval of information."

Cox goes on to praise Schwartz for his offer to discuss the concept of Internet-, or Web-, or blog-, or something-based electronic dissemination further.

PR agency chief John Moran posted this response: "394 words into this non-response, Chairman Cox says it will need to be determined if effective means exist 'to guarantee that a corporation uses its website in ways that assure broad non-exclusionary access.' Of course those means exist - we don't need an expensive, taxpayer-funded blue ribbon panel to figure that out. Just as the original law made very clear what communication channels constitute fair disclosure, an update could make equally clear how corporations will be required to maintain open access to all material information."

"We've had enough interaction with the Chairman (and read enough of his writings) to know he understands the utility of the internet to inform investors," Schwartz wrote last month. "But until we see a formal revision or clarification to FD, we'll still be limiting what we disclose via blogs and the internet. And consuming trees with press releases. Which can't, in the long run, be all that desirable."