DISCLOSURE DANGERS: Zero Margin for Error

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

Neil Hershberg, SVP – Global Media

It’s a regulatory reality that many IR professionals are reluctant to recognize: there are no “safety nets” when it comes to the hidden dangers of disclosure compliance.

Several blue-chip companies recently experienced the sensation of free-falling in the financial markets when their earnings results or other material news announcements were prematurely released, roiling the markets. These issuers learned the obvious: there are no “reset” buttons — or retractions — in today’s era of instant information.

Disclosure compliance is a high-wire act that most IR professionals would be wise to avoid. In pure business terms, the risk/reward ratio simply doesn’t make sense. The cost-savings are modest at best, and the potential consequences enormously damaging on multiple levels.

In other words, regulatory reporting is best left to the professionals. And one shouldn’t automatically bestow that distinction on all the new entrants in the commercial news wire industry, either.

Business Wire, which has been helping public companies fulfill their disclosure obligations for more than a half century, has the expertise, technology, infrastructure, network security safeguards, and staff to satisfy regulatory requirements in North America, as well as a dozen international jurisdictions.

The core service that we provide, in addition to the simultaneous, real-time distribution of price-sensitive information to market participants, can be succinctly summed up in three words: ASSURANCE AND INSURANCE.

Business Wire’s proprietary NX technology has been awarded patents in the United States, Canada, and the European Union for its simultaneous news delivery capabilities. When it comes to full and fair disclosure, as prescribed by the SEC’s Reg FD, Business Wire’s NX technology is the only news delivery platform that has been independently validated by patent authorities on two continents.

We also undergo a gauntlet of audits annually by the world’s leading accounting/management firms, all of whom try to find fault with our network security, editorial systems, and workflow procedures. And each year, Business Wire passes muster, which results in our being sanctioned by the world’s leading securities regulators, including the FSA (UK) and AMF (France). Business Wire earns the right to operate as a regulatory disclosure in these major financial markets by demonstrating its adherence to the world’s most demanding standards. Infrastructure matters.

So does experience. At the end of the day, it’s all about people and service. Business Wire is unique in the industry as we have close to 200 editors in 21 newsrooms worldwide. We don’t operate anonymous editorial processing stations, with their “bakery number” approach to client service. We know our clients — often on a first-name basis.

What this means, in layman’s terms, is that we have your back. In the world of business, that is a priceless benefit that goes beyond simple cost considerations.

Our seasoned editors, many of whom have decades of service, pick up scores of client errors each month, ranging from inconsistent numbers in earnings announcements, wrong dates, links that don’t work, etc. Having another set of eyes look at your release prior to distribution is truly invaluable, and could spare you and your company the angst of trying to rectify a major mistake.

The “insurance” that we provide clients — mitigating potential market mayhem — may well be the best value in the entire investor relations industry.

Some vendors with skeletal service offerings have aggressively been pushing “Do it Yourself” disclosure models.

One of the most vocal proponents of the DIY model, a leading web filing service, recently went down during peak filings. The outage clearly illustrates the danger of over reliance on technology without a suitable backup system in place. In other words, DIY = DOA.

In our view, DIY vendors are doing their clients a major disservice, given all that is at stake.

Clearly, disclosure compliance is a lot more intricate– and the miscues far more devastating — than may seem obvious.

We think that the “DIY” approach is most appropriate when limited to select home improvement projects.

However, when it comes to something as serious as disclosure compliance, the risks are many and the rewards few. The wiser course of action: go with the pros.

One Response to DISCLOSURE DANGERS: Zero Margin for Error

  1. [...] of thousands of releases per year. That’s why announcements crossing a professional wire undergo a rigorous series of checks and quality-control measures before being released to the [...]

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