by Cathy Baron Tamraz, Chairman & Chief Executive Officer, Business Wire
Herb Greenberg, the respected CNBC market commentator who first asked whether Netflix violated Reg FD with its use of social media, subsequently put the issue into its proper perspective: It’s all about “common sense.”
Unfortunately, common sense seems to be in short supply these days, as attempts to redefine “full and fair disclosure” depreciate its value to market participants.
In a prescient post in July 2012 (http://www.cnbc.com/id/48086440), Greenberg asked whether Netflix CEO Reed Hastings side-stepped Reg FD by touting on his Facebook page that Netflix had set a new milestone in monthly viewing.
The provocative post apparently caught the eye of SEC officials; the agency filed a Wells Notice against Hastings and Netflix, indicating an inquiry into whether there was a basis to pursue the allegations.
Greenberg, in a December 2012 post, reflected on the surprising reaction of some folks to the SEC’s action. As far as Greenberg was concerned, the issue was simple.
“Bottom line: I’m all in favor of social media as a point of dissemination,” Greenberg wrote.” “They aren’t going away. But public companies and executives want to use them, and they have to play by the rules. That means, simply, issue a press release at the same time. Simple common sense, don’t you think?”
The SEC tweaked the rules recently by issuing a report on the possible use of social media tools for compliance purposes. Unfortunately, the agency’s report generated a lot of heat, but little illumination.
Thomas Paine, in talking about government and society, wrote his passionate pamphlet called “Common Sense” in 1776. Written more than 200 years ago, his words are timeless:
“There is something exceedingly ridiculous in the composition of the monarchy. It first excludes a man from the means of information, yet empowers him to act in cases where the highest judgement is required.”
Common sense dictates that full and fair disclosure means that all market participants have simultaneous, real-time access to market-moving information. Business Wire has a patented news delivery platform — “NX” — that ensures network recipients worldwide have equal, unrestricted and simultaneous access.
Common sense dictates the overriding importance of network security, and the vetting of corporate announcements to validate their source. Business Wire’s network systems are audited annually by independent management consultants, ensuring compliance with the rigorous standards of securities regulators in multiple international jurisdictions. Additionally, Business Wire has close to 200 editors — and authentication procedures — to provide credible, vetted information to the capital markets.
Common sense dictates that an audit trail exists to protect issuers in the event of a regulatory investigation. As a point of fact, the SEC itself utilizes Business Wire’s audit trail when investigating companies that have caught their attention.
Common sense dictates that the recommendations of prominent professional organizations such as The National Investor Relations Institute be factored into policy decisions. Specifically, NIRI’s “Best Practices” call for a combination of Reg-FD compliant platforms to ensure the broadest possible investor outreach.
Common sense dictates that service providers adapt the latest technologies. Business Wire’s multi-channel platform has long embraced social media (it has 61 industry Twitter feeds). In fact, Business Wire is the industry technology leader with five patents, including two for social media innovations.
Common sense tells us that information should be simultaneous and ubiquitous. Excluding anyone from access to material information is the road to chaos, leading to a possible return to the “Whisper on Wall Street.” Ironically, this is the very thing that Regulation Fair Disclosure sought to eliminate in 2000.
Clearly, there is no substitute for common sense. While it is apparently lacking in some circles, the encouraging news is that the investor relations industry has a proud history of taking a pragmatic and thoughtful approach in meeting its professional obligations, as confirmed by this recent NIRI survey.
The silver lining, as Thomas Paine and Herb Greenberg have taught us, is that common sense never goes out of style.