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Material Disclosure and Blogs

Monday, July 30th will be interesting day for those who counsel CEOs of public companies on digital strategies . . . and corporate lawyers.

Jonathan Schwartz,  chief executive officer and president of Sun Microsystems, announced on his blog last Tuesday that Sun Microsystems will make known its Q4 results to the general public on Sun Microsystems' IR web site and RSS feeds "before releasing it through the third party news services that traditionally distribute such information to paying subscribers". The lag will only be a matter of 10 minutes between when Q4 results are released on the Internet and distribution by news wires. But, as Schwartz says, the timing is "symbolic". Posting information directly rather than through proprietary services "sets a path for other public companies seeking to drive greater transparency".

He's right. (Although Business Wire senior vice president Neil Hershberg argues in a comment on Schwartz's post, with rather convulted logic, that this is really about "promoting a return to the dark days of disclosure" . . .He has a lot to lose though I would think.)

But the impact of this approach goes beyond just the democratization of disclosure. It brings into question the resistance of public companies to executive blogging out of fear a CEO's comments may over-step the bounds of security regulations around timely disclosure of material information.

On the contrary, I would argue that disclosure of material corporate information on a personal blog should meet SEC or Canadian securities commission dissemination requirements. Note, I said it "should". I am not  securities lawyer. I simply believe it is self-evident that -- at a minimum -- blogs should be accepted as an additional, optional disclosure channel. Why? Because simultaneous diffusion of market information today has to take into account that ordinary investors tracking and managing their portfolios may not have access to proprietary news distribution systems. But they can -- at no expense -- set up RSS feeds to get the information they need and be warned when something changes.

That's fair.

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