Recent Regulatory Musings on Disclosure Practices & Today’s Maalox Markets

Today’s Maalox markets have understandably rattled retail investors, who have nervously watched their portfolios get pummeled by the distressed Dow.

When we’ll see a “return to normalcy” is anyone’s guess. Even the experts seem exasperated in trying to predict the market’s trajectory.

Restoring the tattered confidence of ‘Main Street’ investors promises to be a challenge, but their participation is key to getting our capital markets back on track.

Recent regulatory musings on disclosure practices, however, may prove to be a roadblock in the market’s recovery.

The SEC’s issuance of Interpretive Guidance on web-based disclosure has become a Rorschach test for the investment community, leading to wildly exaggerated assessments of the SEC’s true intent. While we view the SEC’s position on the use of corporate websites, RSS feeds and blogs for disclosure purposes as cautious and deliberate, others have cast the SEC’s stance to conform to their own self-serving agendas.

The SEC’s timing re its tinkering with disclosure reform is unfortunate, and its lack of clarity compounds the issue. The danger is that retail investors will remain on the sidelines, particularly if they sense that the playing field has tilted to their disadvantage.

The health of the financial markets is largely contingent on investor confidence and perceptions of market fairness. The SEC’s latest disclosure initiative is unlikely to reinforce either tenet among shell-shocked investors, who are in desperate need of reassurance and shelter from uncertainty.

The SEC’s proposition that standalone website postings, RSS feeds, and corporate blogs may satisfy public disclosure in select situations sends the wrong message to anxious investors.

One of the nation’s leading consumer advocates labeled the SEC’s guidance “non-disclosure disclosure” in a recent Reuters interview. At a time when many observers are calling for more stringent regulation of our capital markets, the SEC decision to seemingly relax disclosure requirements appears seriously out-of-step with the emerging consensus.

Business Wire believes that investors are in no mood to start engaging in an information scrum, ferreting out market-moving information that was once readily accessible via their choice of multiple, freely available platforms.

Regulation Fair Disclosure has proven so successful precisely because it lived up to its original vision and mandate: it created a level playing field for all investors. Business Wire is proud to have played a role in Reg FD’s practical implementation: Business Wire’s patented NX delivery system delivers news simultaneously and in real-time to the investor universe on an unrestricted and equivalent basis.

In our view, skittish investors have little interest in taking a crash course in forensic web-searching to pinpoint the information they are looking for. Broadly disseminated information, available without cost or restrictions via multiple distribution channels, remains the most effective way to satisfy the spirit and intent of Reg FD.

The SEC has come up with a solution for a problem that doesn’t exist.

–Neil Hershberg, Senior Vice President, Global Media, Business Wire

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