SEC Chairman Christopher Cox has spoken. While he doesn’t explicitly use the word “blog,” he suggests in his comment on Sun Microsystems’ CEO Jonathan Schwartz’s blog that corporate Web sites, or blogs, are a very good thing.

SEC chief makes blogging history

Cox created blogging history by leaping into the blogosphere and posting his letter as a comment to Jonathan’s blog. The pair have been involved in a rather esoteric back-and-forth about something called RegFD (regulation fair disclosure).

Specifically, Jonathan has requested that corporate Web sites (i.e. blogs) be considered a proper channel for publicly (and broadly) disclosing material business information. Cox has yet to say ‘yes’ per se but looks like he’s leaning that way. Here’s what he wrote on Jonathan’s blog:


I mailed the response to your letter
yesterday, but since you’re talking about transparency and efficiency
in communications, I thought you might appreciate my taking advantage
of the Internet’s speed and potential for broad dissemination by
posting here as well.


Chris Cox

November 2, 2006

Mr. Jonathan Schwartz
Chief Executive Officer
Sun Microsystems, Inc.
Mailstop UMPK10-244
10 Network Circle
Menlo Park, CA 94025

Dear Mr. Schwartz:

Thank you for your September 25, 2006 letter. In your letter, you
suggest that, in light of the evolution of the Internet, the Commission
should state that certain types of corporate website postings,
including electronic mail alerts, would satisfy the broad
non-exclusionary dissemination conditions of Regulation FD.

…I believe strongly that the Internet is a powerful tool that can be
used effectively by corporations and all market participants to provide
information to the market and investors. The Internet can empower
investors to obtain and evaluate information about companies, and its
potential has not yet been fully exploited…”

– SEC Chairman Christopher Cox in a comment posted to Jonathan Schwartz’s blog (Nov. 3, 2006)

Conjecture on why there’s a debate about corporate blogs and RegFD

What’s interesting about this little debate is that there’s any debate at all. Of course corporate Web sites (and blogs – which are a kind of Web site) are a way to “broadly” disseminate information. If it’s a public blog, an investor has instant access to the information whether he or she visits the site or gets the update via an RSS newsreader.

The current system is multi-step and seems rather indirect to me. Companies issue a press release, the business press pick it up, pull what they want from it and publish their story “reporting” on the company’s earnings announcement.

Me thinks the real problem here is that if companies transmit their earnings releases via a blog post, that obviates the need for mainstream media to “announce” the news to investors.

Useful Links

Wall Street Journal’s Law Blog
(WSJnl blogger Peter Lattman is miffed – OK, tongue-in-cheek – because the SEC Chairman didn’t leave a comment on his blog; yet another example of MSM wanting to be first on important stuff – dontcha think?)

SEC Chief Suggests Blogs For Disclosures (Washington Post, Nov. 7, 2006)

SEC chief posts to CEO blog (IR Magazine, Nov. 7, 2006)

“The concept of a company using its own web site to
release important financial information is a controversial one. For
one, hackers could post fake information to blogs. Others note that
companies themselves could manipulate material after posting it. It
also simply up-ends the established order. ‘Can a company bypass the
mainstream channels and be its own news service?’ asks Debbie Weil,
corporate and CEO blogging consultant. ‘It seems scary and different.'”
– by Anna Snider in IR Magazine

Private letters turn into public conversations (Daniela Barbosa makes the point that the blog exchange between Schwartz and Cox demonstrates “the power of social media tools – enhancement of the creation, distribution and consumption of information.”)