Disclosure Advisory Board Comments on Recent SEC Web Guidance and Value of News Releases As Primary Disclosure Vehicle
Board welcomes recent SEC guidance about company websites and believes news releases will continue to play important role in achieving "best practice" investor communications

Most companies are unlikely to make significant immediate adjustments to their communications practices in the wake the U.S. Securities and Exchange Commission recent guidance, according to the Disclosure Advisory Board.

The Disclosure Advisory Board -- a 15-person council of leaders in the corporate, regulatory, investor, reporting and academic communities that was organized by PR Newswire -- indicated that the recent "Interpretive Guidance" from the SEC provided needed encouragement for companies to better use their web sites and blogs for investor outreach -- but not as a replacement for a news release that simultaneously reaches all investors.

"The Disclosure Advisory Board welcomes the SEC's guidance about use of company websites for meeting corporate disclosure obligations. Since the widespread adoption of the Internet by investors, the means of disclosure have multiplied, providing investors with a wide choice in accessing a company's news," the Board said in an Aug. 21 statement.

"Public companies in the United States have been challenged in determining the role of the company website in achieving compliance with disclosure obligations. The SEC and U.S. stock exchanges have in some cases required companies to use their websites to make certain disclosures (e.g., governance documents), but in other cases have been reluctant to sanction website postings as an appropriate channel (e.g., Regulation FD disclosure). The SEC's willingness to provide additional guidance is thus a welcome development."

The Disclosure Advisory Board, which comprises representatives from large U.S. companies, as well as legal advisors, regulators, analysts and investor relations consultants, believes that most corporations will not make major alterations to their communications practices.

This is due in part to the SEC's unwillingness to approve website posting categorically as a means of satisfying Regulation FD. In the SEC's view, a website posting "may" be sufficient for those purposes, but that conclusion will depend on all the facts and circumstances, the Board said.

The Board added, "While at least one company -- Sun Microsystems -- reached that conclusion even prior to the SEC's guidance based on a specific set of procedures, many companies may not wish to lead the pack in this area absent greater regulatory certainty. Those companies will instead continue to retain the news release as the centerpiece (along with periodic reports) of their communication strategy. Others, particularly companies with a limited analyst following, will consider the news release to be the best way to command immediate attention from investors, analysts and journalists."

The Board continued, "Companies interested in taking advantage of the guidance will also face a number of questions raised by the SEC, which may also inhibit reliance on the SEC's guidance. For example, is the company's website a "recognized channel of distribution" such that the company can conclude that posted information has been properly "disseminated" for compliance purposes? Companies must consider how their particular investor base typically accesses company information, which in some cases may well be via other channels, such as a financial trading terminal, through ticker-based information on a search engine or online financial information portal, through the newspapers, or indeed on the companies' websites."

Even for widely followed companies whose websites may constitute a "recognized" channel, the SEC cautions that publication of "important" information on a website may need to be accompanied by additional steps to alert investors of upcoming postings. Of course, one of the means the SEC suggests in this regard is the news release, the Board stated.

The concern among companies that information posted on a company website may go unnoticed is not unfounded. As one example, the decline in retail voting following the implementation of the SEC's "notice and access" proxy rules has been well documented. If increased use of website postings is accompanied by a decline in retail access to or interest in company news, that would not further the important goals of the U.S. disclosure regime. "Push" technologies, such as subscriptions to RSS feeds, are one way that companies can mitigate this concern but it is doubtful that these additional means will supplant the news release in the near term, at least regarding key releases such as earnings announcements, the Board concluded.

Since its establishment three years ago, the DAB has consistently promoted best practices in company communications. The board has advocated, for example that EPS guidance, if provided, be supplemented by fundamental analysis of key drivers of a company's business, including non-financial drivers. At the same time, the board has favored increased disclosure by large investors about their positions to enhance the transparency of trading markets.

All of these positions reflect a more basic proposition that transparency is rewarded by the market. Broadly accessible information is key to that proposition, and companies seeking to incorporate the SEC's guidance into their communication programs will rightly want to ensure that all channels of information to investors are used effectively.

About the Disclosure Advisory Board

The Disclosure Advisory Board was brought together by PR Newswire in June 2006 to assess and comment upon the state of corporate disclosure and transparency. Comprised of 15 individuals with a combined 450 years of regulatory and compliance experience, the aim of the Board is to debate current disclosure and governance issues, and based on the discussions, propose "best practices" for improved financial and corporate reporting. The Disclosure Advisory Board believes that communication -- disclosure and transparency -- lies at the heart of winning back public confidence.

Members of the panel are: John Bierbusse, corporate director and retired equity research analyst at A G Edwards; Janet L. Fisher, partner, Cleary Gottlieb Steen & Hamilton LLP; Valerie Haertel, VP/director of investor relations, Medco Health Solutions, Inc.; Jerry Hostetter, VP/director of public relations and investor relations, Smithfield Foods Inc.; Deborah Kelly, partner, Genesis Inc.; Mark Hynes, managing director of Global Investor Relations Services for PR Newswire; Jack L. Kelly, former co-head, industrial research team, Goldman Sachs; Mary Beth Kissane, president and founder, Corporate Perception Research; Sam Levenson, SVP Investor Relations, Sony Corporation of America; William A. Relyea, managing director, H.C. Wainwright & Co., Inc.; Diane Salucci, SVP, Bear Wagner Specialists LLC; Martin Shea, EVP, investor relations, CBS Corporation; Kurt Stocker, member of the board of directors of NYSE Regulation, Inc. and chairman of the New York Stock Exchange Individual Investors Advisory Committee; Anna Sussman, director, Investor Relations and Corporate Communications, Pharmion Corporation; Louis M. Thompson, Jr., partner, Genesis Inc., and managing director, Kalorama Partners, and former CEO, president and board member of the National Investor Relations Institute.

About PR Newswire

PR Newswire Association LLC (http://www.prnewswire.com/) provides electronic distribution, targeting, measurement and broadcast services on behalf of tens of thousands of corporate, government, association, labor, non-profit, and other customers worldwide. Using PR Newswire, these organizations reach a variety of critical audiences including the news media, the investment community, government decision-makers, and the general public with their up-to-the-minute, full-text news developments.

Established in 1954, PR Newswire has offices in 14 countries and routinely sends its customers' news to outlets in more than 170 countries and in more than 40 languages. Utilizing the latest in communications technology, PR Newswire content is considered a mainstay among news reporters, investors and individuals who seek breaking news from the source. PR Newswire's leading services include ProfNet(SM), eWatch™, MEDIAtlas™, Search Engine Optimization, MediaRoom, MediaSense™, MultiVu™, U.S. Newswire, the preeminent policy newswire in the industry, Vintage Filings, the fastest growing Edgar filing company, and Hispanic PR Wire, LatinClips and Hispanic Digital Network, the foremost Hispanic communications services. PR Newswire is a subsidiary of United Business Media Limited of London.

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SOURCE: Disclosure Advisory Board

CONTACT: Jason Rando, The Ruth Group, +1-646-536-7025 or