by Neil Hershberg, Senior Vice President, Global Media for Business Wire
“The website-only minimum is a weak minimum . . . It’s like the NCAA requiring a 2.0 GPA. Any student should have to do more than the minimum.” –NIRI Member
It is refreshing — and reassuring — to see that common sense and reason still prevail in the investor relations industry.
The National Investor Relations Institute, the prestigious international association of IR professionals, recently surveyed its most senior members to gauge the pragmatic impact of the SEC’s “Interpretive Guidance Release on Web-Based Disclosure” [August 2008] on current news distribution practices.
The Guidance Release ranks as one of the most controversial in the SEC’s history; its lack of clarity has created considerable confusion within the IR community.
Self-styled disclosure “experts,” many masking their own commercial interests in the debate, aggressively jumped into the fray, seeking to advance their own business prospects while giving the appearance of detached observers. Fortunately, real-world transparency kicked in as the industry saw right through their vacuous arguments.
The NIRI membership survey, independent, comprehensive and authoritative, should finally settle the issue as to how the industry itself defines disclosure “best practices.” The good news is that the overwhelming majority of respondents continue to engage in disclosure activities that serve the best interests – and information needs – of ALL market participants. The real winners here are investors as a whole, who continue to have broad and equivalent access to issuer information that may influence their investment decisions.
Among the survey’s key findings:
- Only seven percent of respondents have made changes to their disclosure practices as a result of the SEC’s Guidance, generally adding new distribution channels. In fact, a higher percentage of respondents today are relying on paid press release services as a primary disclosure vehicle than before the SEC issued its Guidance Release. The broadly disseminated press release lives – because it works.
- The most common reason cited for not making any changes to their current practices is because there is no compelling reason to do so. Other key drivers in the decision to retain the status quo are the desire for exposure, the greatest transparency possible, and legal opinion.
- Many respondents view additional communications channels as supplemental to traditional channels, rather than replacements for them.
- The use of corporate web sites for information dissemination at this time is almost entirely driven by business considerations rather than regulatory ones.
- When asked to rank the factors that influence their decision to issue a press release versus an alternative channel, respondents ranked, on average, materiality as the most important factor, and cost as the least.
(NIRI members can view the full survey results here.)
We thank NIRI for its thoughtful, real-world guidance re: the SEC’s Interpretive Release, and for its invaluable insights on how its members have responded in terms of their own business practices.
Above all, we applaud the investor relations industry for continuing to recognize the value that a broadly disseminated press release, made available to ALL market participants simultaneously and in real-time, means in terms of full and fair disclosure. Its reassuring to know that the investor relations industry remains committed to the principles of its core mission.
We wish NIRI success at its annual meeting in San Diego June 6 -9. There probably has never been a more exciting time to be in the investor relations industry.
UPDATE: Mark Hynes has some additional thoughts on this topic at his own blog, in a great entry, “Why Would an IRO Limit News Dissemination?”