Yahoo surprised some by foregoing the usual conference call format when they announced their earnings results Tuesday. Perhaps this was a strategic decision on their part to avoid having to comment or answer questions on the ongoing negotiations with Verizon. The reality is that it might have been a moot point anyway since Yahoo likely can’t comment on the negotiations anyway. However this shift in their reporting practice highlights the changing dynamic in fair disclosure and how information is communicated.
The Regulation for Fair Disclosure (Reg FD) was put into effect a number of years ago (actually it was 2000) and this mandated that all publically traded companies must disclose material information to all investors at the same time. Earnings announcements fall into this category. Companies would announce when they would release their earning information which might include a scheduled conference call and/or the dissemination of this information through a simultaneously released press release. Sixteen years ago the simultaneous disclosure through the press release agencies was a big deal. In fact it still is but of course I would say that, Acquire Media patented its own simultaneous disclosure process that is still in use today.
Fast forward to 2008 and the SEC clarifies that the use of a company’s website to communicate its key company information is authorized. Jump ahead to 2013 and the information sharing landscape is dramatically different. The SEC gives its stamp of approval for companies to use social media for their announcements and still be in compliance with Reg FD. Companies still need to publish the when and where of these key announcements but the choices are aplenty: webcasts (con calls), websites, social media, and traditional press releases. The choices make it easier for companies to comply with regulations and reach their investors. However for investors and other financial professionals monitoring the markets, the multitude of choices becomes unruly to manage – at least on their own. If you use a news service, they should be monitoring all the outlets for you. At Acquire Media, you just identify the company you’re interested in and we supply the relevant information regardless of which outlet is used.
Now this little history lesson begs the question, what will be next? Right now, the SEC is in the midst of an initiative to simplify disclosure requirements as part of its overall disclosure effectiveness review. In short, they are looking to streamline the process and remove duplicative requirements. Again, this sounds great for the companies but what about for the investors? Currently the SEC is seeking public input on some of their proposals. Hang on folks, this could get interesting.