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Sep 22, 2010

Warnings issued against website-only disclosure

Lawyer says passive approach likely to be ‘found lacking’

Market professionals warned against disclosing financial information solely on the corporate website during this week’s IR magazine webinar.

Entitled ‘Shareholder relations: compliance or engagement?’, the webinar examined the issue of website disclosure, which has been a hot topic since April when Google announced it would disclose financial information exclusively on its website.

‘The web-only passive approach is at some point going to be found lacking,’ predicted panelist Thomas Rice, a partner at law firm Baker & McKenzie. ‘My own view is I’m really not sure how seriously the courts and the SEC ultimately will take the position that a posting to a web[site] is enough.

‘I can see a circumstance where a material corporate development is posted on a web[site] and something bad happens and lawsuits are filed, and I’m not altogether certain the completely passive approach is going to be found to have been sufficient.’

Google’s move follows guidance from the SEC, released in 2008, that says companies could publish information to a website and meet Regulation FD as long as certain conditions are met. 

‘Would we go to a model like Google’s? Probably not,’ said Valerie Haertel, vice president of IR at Medco Health Solutions. ‘It’s not in keeping with our philosophy here at Medco, where we want to have complete transparency and make sure information is fully disseminated. We feel it is important to continue to include the traditional means for communicating news.’ 

She added that wire services are ‘used by a broad range of investors’.

The third panelist on the call was John Viglotti, vice president of IR analytics at PR Newswire, who took the opportunity to defend the value to public companies of using wire services to disseminate information.

‘With hundreds of public companies to follow, among a universe of 50,000 global public companies, it really gives one thought about making an institutional investor come out of its workflow to find them,’ he said.

Advocates of web disclosure say self-publishing news to the website saves money and simplifies the disclosure process.

Several firms, including BGC Partners and Expedia, use a notice and access approach, where they issue a short press release directing investors to earnings releases on the website.

The webinar was produced with support from PR Newswire. Listen to the full webinar here.