How to Write an Earnings Release For All Audiences

By Natasha Artavia, Business Wire

With another earnings season to soon commence, there’s no better time to review a few editorial practices that will provide your investors, the media, and your company with a successful, interactive earnings release.

Headline
Let’s start with the basics. Your headline is an essential element of your earnings release, as on databases, RSS feeds and social channels it’s often the first, or only content visible to analysts and investors. Keep your headline short and to the point. Journalists and the investor community will be actively searching for your announcement, and a succinct, search-optimized headline is crucial to their locating your release.

Sub-headline

Your sub-headlines should emphasize your company’s most important financial figures and business position from the previous quarter or fiscal year. These could include: dividend announcements, sales growth, share increases, financial results from a major product launch, YOY and/or quarterly growth. Using bullet points to format your sub-headlines can make your layout more visually appealing, but don’t go overboard. Treat your sub-headlines as premium real estate that provides your audience with the important highlights of the quarter. Compelling sub-headlines will encourage your audience to continue reading below the fold.

Body
While there is a plethora of financial information that must be disclosed to your investors and the media, this data shouldn’t overwhelm the reader with blocks of text. Here are a few ways you can provide your audiences with a more reader-friendly earnings announcement.

• Use bullet points to break up the numbers

The use of bullet points in a financial news release will draw the readers’ attention to the significant facts and figures. Plus, bullet points provide clean divisions between separate sections within your text, while also doubling as quick “numbers at a glance” references for the media.

• Tables can help illustrate your news by providing readers with a visual breakdown of the information you have included in the release

Just because you have provided full financial tables in your earnings announcement, this doesn’t mean you can’t insert imagery within the body of your news release. These tables should be smaller and can provide comparisons to prior years or quarters, or highlight certain aspects of financial growth. Think of these tables as additional resources the media can use to develop their story.

• Increase message adoption with multimedia

Providing a visual element with your earnings release will not only increase media pickup, but will augment a predominantly text announcement. Consider adding an infographic that shows readers the growth your company experienced this past quarter or fiscal year.

• Don’t forget your hyperlinks

It’s extremely important to add hyperlinks or URLs for the media and investor community. If you are directing your audience to the Investor Relations section of your website or the earnings webcast, don’t tell them where to go…show them. Provide them with the registration link that will take them directly to the event. If you have a report or are providing your company’s earnings as a download, include the URL that forwards readers to these resources. Hyperlinks are an excellent tool to increase engagement with your audience. Links add additional texture and depth to your release, giving the reader a better experience.

However you decide to format your earnings release, we hope you find these suggestions to be useful. You can also download Business Wire’s Best Practices for Enhancing Earnings Releases whitepaper here.

And remember, at Business Wire, our editors, client services representatives and account executives understand how stressful the earnings period can be. From submitting your order to confirming distribution timing and formatting, we’re here to help make this process as smooth and efficient as possible. Feel free to reach out to your local newsroom before submitting your next earnings release. We can work with you on the best way to submit your release and the best time to disseminate the announcement.

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NYSE Proposes Changes to Material News Notification Requirements for Listed Companies

By Matt Van Tassel, Business Wire

Last week the NYSE submitted a proposal to the SEC to update some of their material news requirements for listed companies. The two points of the proposal that will be of most interest to Business Wire clients are the extension of the pre-market notification requirement and a change to when companies should disclose announcements after market.

Pre-Market Notification

The proposal expands the time for companies to comply with the Material News Policy to between the hours of 7:00 AM – 4:00 PM Eastern. Currently companies must disclose material news announcements to the NYSE, at least ten minutes prior to wire dissemination between the hours of 9:30 AM – 5:00 PM Eastern.  The reasoning behind the expansion is that most material news is released prior to 9:30 AM and has the potential to cause both price and volume volatility on other markets during this time, as well as at market open.

Note: Newswires like Business Wire do not handle pre-notification of material news to the exchange. 

Post-Market News Dissemination (4:15 PM is the new 4:00 PM)

The NYSE is proposing companies should wait to disseminate their material news announcements until either the publication of their securities’ official closing price on the Exchange or 15 minutes after the scheduled closing time on the Exchange (which is 4:00 PM Eastern). Why you may ask? Even though the NYSE is closed at 4:00 PM, there are other markets where those securities are being actively traded. This in turn can create discrepancies in the stock’s pricing which may cause investor confusion.

We will continue to monitor these proposed changes to the NYSE notification process and keep you updated.

For additional details, visit Dodd-Frank.com’s summary of the proposed changes.

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When Posting Financial News to an IR Site, Risks Are Not Acceptable.

By Ibrey Woodall, VP, Web Communications Services

Security of an investor relations (IR) website and news distribution is paramount to any public company. Ask the investor relations officer (IRO) who has suffered due to earnings information being released to the public prematurely.  If a company’s earnings news release is accessible too soon, it can move markets, and quickly. When this happens, expect heads to roll in many ways.

Although most IR site vendors state that earnings releases post automatically to the IR site service they manage, only a few can actually confirm that the posting of the news release happens directly from the distributor to the IR site. Some vendors utilize a third-party aggregator to obtain newswire-distributed news releases and then post the release onto the IR site service. Anytime an additional step like this is added to a workflow process, more time is needed, and the opportunity for something to go wrong is greater. Most experienced communicators are familiar with the concept of Murphy’s Law – anything that can go wrong, will go wrong.

At Business Wire, an earnings release is never staged onto an IR site before publication – hidden or not. When the earnings release is distributed to the desired outlets, it gets posted directly to the IR site at that time, not any sooner. This leaves no opportunity for Murphy to cause trouble. Once the news release distribution is ordered, the option to post the

Earnings news releases that are distributed via Business Wire post directly and simultaneously to the Business Wire InvestorHQSM IR site service.

release to the InvestorHQ^SM IR site is selected, as is the option to place the release in one or more subject matter categories. Sweet, simple, streamlined and secure.

As important as the technical dangers mentioned above, so are the internal workflow risks.  All internal procedures at Business Wire have gone through a rigorous audit. Departmental shields against unauthorized access to data can be attested to by the Service Organization Control [SOC] 2 Type II attestation engagement report that Business Wire received in 2014.This means that your news release (in text or PDF format) will not be posted to your InvestorHQ^SM site by a Business Wire product specialist to save time or effort.

So, when selecting an IR site vendor, do assess and compare the basic features and functionality of the service. Don’t forget, however, to pay close attention to the details of the IR site service when it comes to security of your financial data.

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Ibrey Woodall is Vice President of Web Communications Services for Business Wire. She is responsible for Business Wire’s InvestorHQ IR site and NewsHQ online newsrooms services. She can be reached via email Ibrey.Woodall@Businesswire.com or LinkedIN https://www.linkedin.com/in/ibreywoodall.

Why the Deck is Stacked Against Retail Investors

by Neil Hershberg, Senior Vice President, Global Media

Neil Hershberg, SVP - Global Media

The classic Cole Porter musical, “Anything Goes,” is returning to Broadway this spring.

Retail investors won’t have to wait that long. In practice, “Anything Goes” has become the unofficial mantra of Wall Street, the Digital Age’s equivalent of ‘The Wild West” when it comes to disclosure.

Unfortunately for individual investors, who invariably get the short end of the stick, the folks in a position to end today’s information free-for-all have yet to take action.

At the risk of sounding like the Cassandra of capitalism, here’s why retail investors are swimming upstream:

1. Reg FD’s “level playing field” has become the regulatory equivalent of an ecological disaster area; it is eroding faster than many storm-swept East Coast beaches.

Mega-cap companies with huge investor followings have, for reasons best known to themselves, opted for micro-disclosure, dispensing with broadly disseminated news releases in favor of standalone web postings or similar truncated practices.

Rather than providing simultaneous, real-time information access to all interested investors, these best-practice contrarians have essentially decided to ladle access on a sequential basis to anxious  investors clamoring for corporate updates.

Over the past few decades, we’ve regressed from “trickle down economics” to “trickle down disclosure.”  Unfortunately, retail investors are the ones getting hosed.

Ironically, technology trend-setters are among the most flagrant abusers of acknowledged best-practice disclosure practices. These industry leaders should know better than anyone the inherent technical limitations of the Internet, and why the web’s architecture makes it impossible to meet the complex challenge of simultaneity.

2. Retail investors also are unknowingly getting eaten alive by spiders; these automated creepy crawlers have become a hidden epidemic.

While Bloomberg recently generated headlines when it published Disney and NetApps earnings results in advance of their official release, the real concern for retail investors should be the stealth spidering tactics of traders deliberately seeking to stay under the radar.

The spiders unleashed by Bloomberg and Selerity likely have plenty of company. In all probability, armies of incognito spiders are clandestinely retrieving troves of actionable, non-public data for their trading masters.

Even if these spiders fail to uncover non-public material information, their very use provides an unfair edge if publicly traded companies do not broadly disseminate their news via a service such as Business Wire.

The reason is that spiders are faster than the RSS readers that retail investors rely on for news alerts when disclosure is limited to a standalone web posting. Whereas Business Wire distributes market-moving news simultaneously and in real-time to financial information systems, portals, and media platforms worldwide, standalone web postings create a feeding frenzy for these rapacious spiders.

Retail investors have a legitimate reason to be suffering from arachnophobia; they are at a distinct disadvantage to market players that control these powerful technology termites.

3. There is a well-known saying that in life, “timing is everything.” That is certainly the case on Wall Street, where latency and milliseconds rule the day.

Winning on Wall Street is largely contingent on the ability to access and act on information faster than anyone else.

Institutional investors clearly have the necessary resources and technology at their disposal to triumph in today’s trading environment.

Notice-and-access and web disclosure disproportionately favor the professional investor, who can read – and react (perhaps even robotically) – far more quickly than the average retail investor.

The trading activity following Netflix’s recent web posting of its earnings (January 26 at 4:05 pm/ET) illustrates the high stakes involved.

More than one-third of Netflix’s total share volume for the day, or just over three million shares, traded after Netflix posted its earnings.

In after hours trading, Netflix’s shares were up $19.16 (10.47 percent).

Although individual investors now have the opportunity to trade in the after-hours market, they are being steamrolled by institutional traders, who clearly have the capability to react with more immediacy.

Retail investors are forced to play a bad hand. A recent blog post by Jack Campbell at 24/7 Wall Street, “Ten Ways Wall Street Crushes Retail Investors,” elaborates on many of these same themes: http://247wallst.com/2011/01/26/ten-ways-wall-street-crushes-retail-investors/

The common denominator linking all these examples is access to material information.

Regulation Fair Disclosure, in its original iteration, is clear on this point: all investors should have equal access to information at the same time.

The answer to the disclosure dilemma is obvious: the integrity of Regulation Fair Disclosure must be restored if retail investors are to be equal market participants.

Simultaneous, real-time access to disclosure news is the only solution that will put an end to the emerging two-tier access system that is slowly taking root.

It’s time for retail investors to get the fair shake they deserve.

Disclosure for Dummies: Notice-and-Access Press Releases Compared to U.S. Mail Service

by Steve Messick, Chief Information Officer, Business Wire

I always respond to a staff newbie when he or she comes into my office asking a question with, “Did you read the manual first?”  I actually prefer to use a more famous acronym but, in the interest of political correctness, will not elaborate.

But that is an important starting point of understanding any technology.  You have to read and research it.  If you still need clarification, then seek out the true experts and ask questions. If you don’t do your due diligence, then you won’t be well-informed, and will not understand the value proposition that technology brings to the table.  So, let’s get educated and talk about the real technology at work here, and examine the competing value propositions of Business Wire versus the “Notice-and-Access” model when it comes to fair disclosure.

Warren Buffett defines value as not what you pay, but what you get for your money. This is so true with applied technology.  We can all relate to the earbud example.  You pay more for a Bose earbud than a lesser brand. But have you ever sat on a noisy subway, jet, or busy freeway and tried to listen to music or talk to someone on your phone with cheap earbuds?  Forget it.  The value proposition of Bose technology is that you pay more, but you get something that actually works, meets your needs, and delivers real value. That is priceless.  When you use Business Wire, you benefit from the value of 50 years of experience and technology.

So let’s get specific here about web technology and its role in fair disclosure.  The operative word is “fair,” which is the key deliverable. Fair disclosure involves three main components: simultaneity, synchronization, and security.   Technology plays a major role in all three.

Simultaneity means that everyone has access to public company information at the same time.  No one gets a head start in acting on the news; it is simultaneous whether you are in Sydney or San Francisco.  Some folks consider posting a news release on a corporate website as simultaneous, and “fair” disclosure.  Yes, I agree that posting a document on a web site means it is available for access by everyone (at least everyone with access to the internet).   But is it “fair” access?  Absolutely not, if you understand the underlying technology.

A simple example: your local post office.   Does everyone in your town go to the same post office at the same time to get their mail?  If they did,  you would have long lines, extended waits, traffic jams,  and the person who shows up late may get their mail a day later. A single web-site has the same problem: extreme competition for access.  If thousands — or perhaps even millions — of investors go to a corporate website at the same time (at the moment of access cited in an advisory alert) to view an earnings release or other material news announcement, it is impossible to get the information in a fair and simultaneous manner.   The site is going to slow down; some investors will get the news later than others.   If the company has not invested heavily in its website infrastructure, the site may crash, or become so slow that your browser will give up.  Not fair, not simultaneous, and ultimately a low technology value proposition.

Synchronization involves the seamless linking of technical systems worldwide to deliver market-moving news to the global investment community. The moment your news release is simultaneously distributed worldwide, billions of dollars in technology at companies and institutions around the globe are synchronized to provide the information to the investor universe — instantly. That is the behind-the-scenes disclosure synchronization that powers the global financial markets. That is the value of Business Wire technology working in synchronization with the investment industry, financial information systems, and major consumer portals for the collective benefit of institutional and individual investors.  The integrated, multi-tiered pipeline that regulatory information flows through generates opinion, analysis and recommendations, all of which build value for the investor.  Independent analysis and expertise is essential for retail investors working at home, as well as the trading desks at large institutional firms.  And it all happens as a result of Business Wire feeding the pipeline.  Simultaneity drives synchronization, which drives value.  Priceless.

Conversely, Notice-and-Access (single web-site posting)  advisories impede the information pipeline and disrupt the synchronization process.    Why does UPS bring your inventory to your door? The answer is so that your business can function flawlessly, as you designed it.   If you had to jump in your truck every day and drive to UPS, then head over to Fed Ex,  and then to the Post Office  for your business inventory, is that value to you?  Your business is synchronized by the predictable flow of inventory into your manufacturing plant.  So is the global information pipeline.

The seamless synchronization of financial information is crucial for fair disclosure. If every investor has to go to UPS (your corporate website, via notice-and-access ) to get the latest news, and then go to the individual web sites of companies releasing information at the same time, it will derail the work flow process. leading to delays and confusion. Fair and efficient markets will cease to exist.

Completing the value proposition of fair disclosure is security.   Value is in knowing that your information is secure and safe until the appropriate time to share with others. Reg FD is all about keeping information secure and private, and then simultaneously providing everyone with equal access.  Any breach in this process can lead to market volatility, investor uncertainty, and potential lawsuits. Is that value?

Keeping your information safe until public disclosure is a complex technology puzzle.   Business Wire’s 50-year track record in secured technology systems means that your information is safe and protected. Posting on a corporate website can be very risky unless the company has invested significant resources in security safeguards. Business Wire’s systems and networks are subject to rigorous annual audits to ensure that your information is secure. Security is at the heart of what we do, and a major element of Business Wire’s core value proposition.

There is a de facto manual for full and fair disclosure, based on real-world applications. Business Wire is proud to be a major contributor to the pragmatic, best-practices model that serves as the backbone of full and fair disclosure in financial centers throughout North America and the European Union. Not only did we read the manual, we helped write it.

When is Disclosure not Disclosure?

by Gregg A. Castano, President, Business Wire

Gregg Castano, President, Business Wire

 

Forget about level playing fields, Regulation FD, interpretive guidance and recognized disclosure channels. What about good, old-fashioned EFFECTIVENESS?

Have we entered a bizarro world in which simultaneously making material information available to millions of investors via every conceivable communications method known to modern man has somehow become LESS effective than posting that same information to one, lonely site on the Internet and hoping that whomever wants access to it will come a lookin’?

If that’s the case, then the sky isn’t really blue, death and taxes aren’t sure things and 15 minutes can’t save you 15% on your car insurance.

Why would it be considered MORE effective, or even sane for that matter, to force every investor, private or professional, to have to frantically hop from web site to web site to web site ad infinitum on any given earnings reporting day to gain access to news that is already fully aggregated and uniformly available in real-time to them at no charge in any number ways, including the mobile phones in their pockets?

Is this some kind of plot against investors by corporate mad scientists, or maybe a sick prank being played upon the investment public by the angry and vengeful ghost of Kenneth Lay? Did Foolish suddenly become the New Wise?

Why wouldn’t the SEC, an organization that should be leaping at every opportunity to undo the damage to its credibility caused under previous Chairman Rufus T. Firefly . . . I mean Christopher Cox, step in and put an end to this electronic game of “Where’s Waldo?”.

Questions, questions. The answers to which seem simple enough that my seven year old twins can easily grasp them. But I guess the obvious has turned into the obscure and the direct into the circuitous. The only thing left for me to do is go home and tell my twins that Daddy was wrong; two plus two actually equals five.

XBRL Update: Jan 2010

On December 4, 2009, the Securities and Exchange Commission launched its XBRL information portal, which can be found at http://xbrl.sec.gov. The portal consolidates in one easy to find central location all SEC related XBRL information and also highlights new XBRL developments to simplify searching for the most up-to-date information. In this issue of the XBRL Update, we will summarize the information available on the SEC’s XBRL portal, discuss the quality of the second wave of filings and provide you an update on how to best prepare for the upcoming 10-K and detailed tagging requirements.

SEC’s XBRL Portal

The SEC’s XBRL portal contains five main categories: Rules and Regulations; Background; View Filings; Interpretive Guidance; and Technical. Details of each category are as follows:

• Rules and Regulations: Contains postings of final XBRL rules for Publicly Traded Companies, Mutual Funds, Nationally Recognized Statistical Rating Organizations and the Voluntary Filer Program (VFP).
  • Allows users to access the respective rules and regulations without having to search through the SEC website.

• Background: Contains general XBRL information, covering:
  • A brief synopsis of XBRL and the countries in which XBRL has already been implemented.
  • A glossary of frequently used terms (i.e. element, concept, extensions, etc).
  • History of the SEC’s adoption of XBRL and information regarding the Office of Interactive Disclosure (OID).

• View Filings: Various options for viewing XBRL filings submitted to the SEC are listed:
  • Users may subscribe to an RSS feed or view the latest 100 XBRL files submitted to the SEC.
  • View filings submitted under the VFP.
  • Search EDGAR filings (which include XBRL exhibits, if submitted) by company name, ticker symbol or CIK number.
  • Link to upload XBRL files to the Interactive Data Viewer (“Previewer”).

• Interpretive Guidance: The SEC will continue to issue XBRL guidance based on their

review of interactive data submissions and questions raised by filers and agents.

• Technical: The technical section includes links to:
  • Approved taxonomies.
  • The EDGAR Filer Manual.
  • Shortcut to the SEC Previewer.
  • Listing of EDGAR XBRL Validation Errors and Warnings.

Second Wave of Filings Submitted to the SEC

On September 28, 2009, the SEC updated the EDGAR system to enhance its Interactive Data (XBRL) file validation capabilities. Since the update, Business Wire has been closely monitoring the quality of the filings, noting a marked improvement in the SEC submissions as compared to the prior quarter. Furthermore, upon closer examination, we have noted through two sets of independent validation tools that the SEC continues to accept filings with EDGAR Filer Manual

errors. From September 28th through November 20th, we noted 30 out of 410 filings had at least one error according to one of the validation tools.

10-K and Detailed Tagging Requirements

Along with the 10‐K filing come additional XBRL requirements, which include mapping: the Statement of Shareholders’ Equity, additional notes to the financial statements and financial statement schedules.

• Detailed Tagging: For clients required to file XBRL exhibits in the first phase, detailed tagging will be here before we know it. First phase filers will be required to present detailed tags for their second quarter filing in 2010. Detail tagging creates an additional burden on the filer as it increases the amount of work required to ensure XBRL compliance and forces the filer to change their financial reporting process to ensure ample time in incorporating last minute changes.

Have any XBRL questions or concerns?  Simply contact us at XBRL@BusinessWire.com.

Two Frank XBRL Questions, Two Candid Answers

by Michael Becker, Vice President, Global Disclosure and Financial Reporting Services, Business Wire

Quite often I speak at industry events on XBRL. At these events I take off my Business Wire hat and speak in general terms about the XBRL community. And while I enjoy nothing more than speaking to folks about XBRL, I have not had an opportunity to let you know how I personally feel, until now. This month we will answer two questions: How should you file (do-it-yourself vs. outsource); and if you opt to outsource XBRL, how do you select a partner?

However, before we can use words like “in-house,” “outsource,” “dimension” or “hypercube,” your organization must first lay the groundwork for XBRL. The primary task is to select a cross-departmental team of individuals who possess the requisite knowledge of your financial statements and footnotes (e.g., investor relations and financial reporting). This XBRL team will be tasked with knowing the SEC’s Interactive Data rule [PDF], the EDGAR Filer Manual (Volume II, Chapter Six), all relative U.S. GAAP Taxonomies and of course, the XBRL rules themselves. It will also be this team’s responsibility to set the XBRL timeline and recommend an approach (do-it-yourself vs. outsource) for your organization.

Question One: Should we tag XBRL in-house with a piece of software or outsource XBRL to a vendor? Do-it-yourself tagging is a long, long (long) way from perfect. This is because the software on the market today is not mature. While many of the XBRL software packages possess a nice graphical user interface (GUI), a solid GUI does not equate to high-quality XBRL. As a matter of fact, the XBRL filings that possessed the highest number of errors in Q2 originated from issuers who attempted to tackle XBRL on their own.

The problem with the in-house approach to XBRL is twofold. As stated earlier, the XBRL software community is maturing and, in my opinion, still has a way to go. Secondly, while XBRL is a computer language that should be easily handled by a computer program, today high-quality XBRL requires a human mind to make determinations on best practice use of taxonomies (e.g., to extend or not to extend a line item) and the EDGAR Filer Manual and XBRL rules. It is no wonder that several software vendors have changed their model to consulting.

Therefore, my recommendation is to not attempt XBRL on your own at this time. And, if you do opt to purchase a piece of software and tag your XBRL filing, work with a partner like Business Wire to QA the tags and assure that the XBRL exhibits validate properly prior to SEC submission.

Question Two: We’ve opted to outsource XBRL to a vendor. What questions should we ask when selecting a partner? Selecting an XBRL partner is important; this is one project where I dare say you get what you pay for.

First, ask where and how the XBRL services are being performed. This includes initial mapping and tagging, creation of the XBRL exhibits; and for those issuers who outsource EDGAR, ask if the XBRL team is in the same location as the EDGAR operation. We are aware that in order to scale, many vendors are outsourcing work to myriad locations in myriad manners. I disagree with this approach wholeheartedly.

An issuer must maintain control when outsourcing. Outsourcing to a vendor who outsources stymies the process and adds unnecessary variables, variables that are not welcome when working with material, non-public information.

Furthermore, the corporate XBRL team must be engaged because nobody knows the nuances of its financials better. Therefore, when selecting a vendor you will want:

• First, the ability to speak with your taxonomist, who knows both U.S. GAAP accounting and XBRL , when you want;
• And second, the ability to update your EDGAR filing and associated XBRL exhibits seamlessly, down to the last minute.

In essence, you must find a vendor that becomes an extension of your financial reporting team.

Nobody wants to make last-minute Author’s Alterations to an EDGAR filing, but it happens, and if it does, make sure your vendor can handle the XBRL and EDGAR changes in real-time. At Business Wire we have our EDGAR and XBRL teams located in one secure office to ensure updates are made in real-time and there are no version control issues.

You must also ask prospective vendors about the knowledge level of their XBRL staff. Be sure to speak with the individuals who will make tagging decisions on your financial statements. Confirm that these taxonomists are knowledgeable and that you will be able to work with them in a collaborative manner, at your pace. For example, at Business Wire we only hire CPA-level staff on our XBRL team.

Lastly, here are several additional questions to ask prospective vendors: At what level do you validate (e.g., XML, XBRL, EDGAR Filer Manual)? How much does the entire process cost (e.g., beware of hidden fees)? What sort of XBRL experience do you have and is the vendor financially stable?

In conclusion, one could easily argue that I am biased on this particular subject. The frank answer is that I am. From my seat, I can see the issuers who have attempted XBRL on their own and the errors they have made, I can see the vendors who outsource XBRL to foreign partners, I can see the vendors that have turned XBRL into an assembly line, I see the challenges of detailed footnote tagging ahead and then look at the brilliant XBRL minds who sit alongside me at Business Wire and think: Who in their right mind would not want to outsource XBRL to a partner like Business Wire?

Web-Based Disclosure Still Not Ready for Prime Time

The one-year anniversary of the SEC’s Interpretive Guidance Release on web-based disclosure will likely pass unnoticed this weekend– and for good reason. In the eyes of most market participants, it has proven to be a non-event that has gained little traction among issuers reluctant to tinker with a proven and effective disclosure system that works exceptionally well.

In retrospect, there are several reasons why the SEC’s Guidance Release failed to become the landmark event that its supporters had hoped for:

• Within weeks of its issuance, the global financial system was in danger of imploding, diverting the attention of the media, the investment community, and other key audiences. As the markets teetered, most constituents were oblivious to the change — and a good many continue to be unaware of its potential implications to this day.
• The fact that web-based disclosure was a pet project of former SEC Chairman Christopher Cox, vilified by some observers in the wake of the financial crisis, wasn’t a selling point either.
• At the end of the day, however, the major reason why the SEC’s Guidance Release has had marginal impact is simple: The financial marketplace recognized its very real shortcomings. In the process, investors have tacitly reaffirmed a proven regulatory disclosure model that has emerged as the global gold standard.

The orderly flow of price-sensitive information to all market participants — available simultaneously, in real time, and without restrictions, to institutional and individual investors alike — was judged to be too important to be left to chance.  RSS feeds, corporate blogs and standalone web postings are no substitute for the broad-based distribution of a news release via a secure multi-channel distribution platform.

The SEC’s Guidance Release purposely lacked clarity and definition; the variables to meet compliance standards ultimately proved far too vague to justify the risks.

Furthermore, we see constant reminders of why credible information channels are so important. Just this past weekend, Reuters rejected a faxed release originating from the Middle East about a purported takeover that was later exposed as being fraudulent. The editor on duty immediately questioned why a release of this magnitude wasn’t transmitted via a recognized commercial news wire such as Business Wire — and he correctly decided not to run the story.

There is a lot more to the disclosure process than simple “information access.”  Authenticating the source, editorial review, and secure networks all contribute to the effective functioning of the global financial markets. We’ve spent nearly a half-century earning our stripes as a reliable, credible news source, which is more important than ever as governments grapple to restore financial stability and transparency.

We certainly don’t want to seem dismissive of the SEC’s Interpretive Guidance Release. In the final analysis, it cast a much-needed spotlight on important new technology tools that help to expand  investor outreach.

We stated from the outset that corporate web sites, blogs and RSS feeds are indeed valuable adjuncts that can help get the corporate message out. We are certainly huge proponents of technology and, in fact, use many of these complementary tools to augment our patented news delivery network.

It is reassuring to note that once the initial hoopla surrounding the SEC’s Guidance Release died down, reason ultimately prevailed. Slowly emerging is a hybrid approach that retains the broad-based disclosure model at its core, while also including the ancillary communications channels cited in the agency’s position paper.

We’ve seen this evolution before — our own distribution network went from telephone lines, to satellite systems, to Internet protocol. Along the way, we folded in fax, e-mail, RSS feeds, blogs, IR web sites, and any other communication tool that will increase “full and fair” disclosure.

The real winner now that the dust has finally settled: Investors who are enjoying the best of all possible worlds.

— Neil Hershberg, Senior Vice President, Global Media for Business Wire

Cathy Baron Tamraz Discusses Disclosure and Transparency

Cathy Baron Tamraz, Business Wire President & CEO, discusses the challenges facing Treasury Secretary Timothy Geithner regarding maintaining and increasing transparency in the financial markets in a new commentary at FinReg21.

Tamraz’s recommendations, combined with new SEC chief Mary Schapiro’s “visceral reaction” to the idea of web-based disclosure in which market participants have to go looking for financial information, are good news for the markets and for investors.  Tamraz talks about the press release as a disclosure vehicle, and how the existing framework for news distribution is already in place to help Sec. Geithner reassess the state of disclosure and help avoid future financial crises.

Go read, and let us know what you think in the comments below.