TheCorporateCounsel.net

Last Fall, Sun Microsystems CEO Jonathan Schwartz asked the SEC to consider allowing companies to use their websites, including blogs on their websites, as a means for satisfying public disclosure obligations under Regulation FD. In what had to have been an SEC first, Chairman Cox responded to the request by posting his letter as a comment to Jonathan Schwartz’s Blog. While by no means definitive, the Chairman’s response certainly opened the door to a dialogue about whether the public disclosure requirement of Regulation FD could be satisfied through a company’s website.

The Chairman’s openness on this issue echoed the SEC’s reaction to the same question way back in 2000, when Regulation FD was originally adopted. In the adopting release for Regulation FD, the SEC indicated that “[a]s technology evolves and as more investors have access to and use the Internet, however, we believe that some issuers, whose websites are widely followed by the investment community, could use such a method. Moreover, while the posting of information on an issuer’s website may not now, by itself, be a sufficient means of public disclosure, we agree with commenters that issuer websites can be an important component of an effective disclosure process. Thus, in some circumstances an issuer may be able to demonstrate that disclosure made on its website could be part of a combination of methods, ‘reasonably designed to provide broad, non-exclusionary distribution’ of information to the public.”

It now looks like Sun is going forward with a website-based approach to disseminating its earnings release, although it will not use the company’s website as the exclusive means for disseminating this information. As described in Jonathan Schwartz’s blog, Sun simultaneously posted its July 30th earnings release on the company’s website, disseminated that information to subscribers through RSS feeds, and filed a Form 8-K with the SEC. Ten minutes after the internet publication and SEC filing, Sun distributed the information through the traditional news wires. Schwartz argues that this approach “will place, for the first time, the general investing public – those with a web browser or a cell phone – on the same footing as those with access to private subscription services.”

Sun’s approach does not really seem to be a “sea change” as Jonathan Schwartz describes it, but perhaps it represents a healthy step in the right direction on public dissemination of important company information. Sun’s new earnings release procedure notably does not cut out the third party news dissemination services, it just gives the RSS subscribers and followers of the Sun website (or the SEC website, for that matter) a little jump on the news. The extra step that Sun is taking can only mean more widespread availability of the information, but it is still hard to say at this point whether web-based disclosure without a news release will ultimately meet the test of being reasonably designed to provide broad, non-exclusionary distribution of the information to the public.

Increasingly, the SEC has been willing to permit website posting of information as a means of making the information publicly available, including: director independence standards in the recently adopted executive compensation rules; committee charters; processes for security holder communications with the board of directors; and code of ethics waivers reportable under Item 5.05 of Form 8-K. Perhaps at some point in the not too distant future, the SEC or its Staff will provide some follow-up on the statements made in the Regulation FD adopting release and recognize how far we have come since 2000 on the use of corporate websites for widespread information dissemination.

Impact of FCPA Investigations on Deals

In this DealLawyers.com podcast, Homer Moyer of Miller & Chevalier describes the latest trends in Foreign Corrupt Practices Act investigations, including:

– Why has there been a rise in FCPA investigations?
– How can these investigations impact a merger or acquisition?
– What can a company considering a deal do to minimize the risk from a potential FCPA investigation?

Early Bird Expires Tomorrow: 3rd Edition of Romeo & Dye Section 16 Treatise

Peter Romeo and Alan Dye are hard at work updating their two-volume Section 16 Treatise. The Treatise is the definitive work in this area with thousands of pages of reference material.

Order your set by tomorrow, August 15th, to receive a pre-publication discount – you can order online or by fax/mail with this order form. The Treatise will be completed and delivered to you in the Fall.

– Dave Lynn