— by Michael Becker, SVP, Financial Product Strategy
In my humble opinion, the 2010 NIRI National Conference was a tremendous success, albeit in one area.
The annual conference committee’s courage to tackle hot button issues like the SEC’s Regulation FD Interpretive Guidance is commendable. However, in its zealousness, I believe attendees were over-served FD, often by ill-informed “experts” and biased parties.
Ill-informed experts and biased parties speaking at NIRI National? Why, yes.
Daniel Kinel of Harter Secrest & Emery LLP, in his session “Fair Disclosure and the Web,” stated that a six-minute delay between web-posting and an 8-K was “simultaneous enough.” (As an aside, I approached Mr. Kinel and explained why six minutes at 4:00 pm ET is a wide gap — i.e., after-hours trading. His response: “Good point.”)
How about James Moloney of Gibson, Dunn who believes leveraging notice-and-access news release disclosure for earnings can save an issuer $40 – 50K annually? (Mr. Moloney, ever heard of a Metro distribution? It’s only $210). Mr. Moloney also discussed the newswire upload process, calling it an extra, cumbersome step. That is a pretty myopic view coming from a person who is paid to protect his clients. The extra step ensures that material news content is vetted, secure, error-free, properly formatted and disseminated to the markets in a ubiquitous manner. My hunch: Mr. Moloney will be busy when issuers self-publish content via WYSIWYG tools with errors (spelling, formatting, etc.).
While the web is assuredly more important for issuer communications than ever before, I do not believe there has been a seachange since the late-2008 survey that found securities attorneys favor wire services over corporate web sites for disclosure of material news. Maybe the Moloneys of the world see the Reg. FD Interpretative Guidance issue as a way to increase billable hours? Furthermore, research has shown greater dissemination improves stock liquidity and lowers volatility while enhancing a firm’s visibility; it can even lower the cost of capital.
Finally, how about ThomsonReuters, who spent a pretty penny on its lunch session, just to tell issuers how disseminating to a handful of distribution points via its mechanism is best practice? (I liken it to telling my son to strive for a C because it’s passing.)
It’s one thing to discuss a topic openly in a transparent manner; it is entirely different when NIRI members are plied with inaccurate information over the course of multiple redundant sessions. For a more accurate look at what NIRI members really feel constitutes proper disclosure, see Neil Hershberg’s recent entry, “Common Sense in Investor Relations.”
In closing, I am young, hungry and ambitious. There is no way I would hitch my wagon to an antiquated business model. Furthermore, I am a realist when it comes to the technology adoption curve and genuinely believe if/when the time comes that another model for material news distribution is better for issuer communications, Business Wire will be right there, doing what we have done for 50 years, evolving to suit the needs of our customers.
Until then, take a step back, look past the self-interested zealots and see the forest for the trees; traditional newswire services today provide the single best method for satisfying Regulation FD disclosure. PR Newswire’s long-time consultant Mark Hynes states it best: “If I believed that they were making buggy whips, I wouldn’t be there.”