WASHINGTON – In the first official communication posted to a blog by a chairman of the Securities and Exchange Commission, Christopher Cox said he was intrigued by the idea of letting companies use Weblogs to disseminate important corporate information.
Cox has invited the chief executive of Sun Microsystems Inc., avid blogger Jonathan Schwartz, to talk to the agency about the idea of allowing companies to disclose significant financial information through blogs.
The SEC chief showed interest in Schwartz's recent request for blogs to be used as a way to expand investors' access to information. His response to Schwartz, posted on Sun's Web site on Friday, caught the attention of the online world and even sparked envy from a Wall Street Journal blog.
A growing number of major companies now publish corporate blogs or online diaries. The SEC position is that current regulations do allow for blogs, like news releases, regulatory filings, Web sites and Webcasts, to be used to disseminate companies' financial information, provided a particular blog reaches a broad audience.
A 2000 rule known as Regulation FD, for Fair Disclosure, ended a long-standing practice by forbidding companies from providing significant information to stock analysts and other Wall Street insiders ahead of the public. The rule requires the method or methods used to be "reasonably designed to provide broad, non-exclusionary distribution of the information to the public."
"The (SEC) encourages the use of Web sites as a source of information to the market and investors, and we welcome your offer to further discuss with us your views in this area," Cox told Schwartz in his posting on the CEO's blog. (He also sent Schwartz a letter by mail.)
Said Cox: "Assuming that the (SEC) were to embrace your suggestion that the 'widespread dissemination' requirement of Regulation FD can be satisfied through Web disclosure, among the questions that would need to be addressed is whether there exist effective means to guarantee that a corporation uses its Web site in ways that assure broad non-exclusionary access ..."
Cox has pushed several technology initiatives meant to give investors more useful and complete information about companies and mutual funds. His novel way of responding to Schwartz provoked jealousy on the part of The Wall Street Journal's Law Blog.
"We're jealous," lead writer Peter Lattman huffed Monday on the blog. "SEC Chairman Christopher Cox posted a comment on a blog. But not the Law Blog. ...
"Shameless plea to Chairman Cox: We've got a serious case of the Monday morning blues and it would turn our day around if you posted a comment on the Law Blog. Don't worry, we don't want your thoughts on Reg FD or hedge funds. Keep it light: Tell us about the last movie you saw. Your favorite book? Thanksgiving plans?"
In a Sept. 25 letter to Cox, Schwartz noted that Sun's Web site, which gets an average of nearly a million user hits a day, includes the blog that he writes as CEO and those of thousands of employees of the Silicon Valley server and software maker.
"My blog is syndicated across the Internet by use of RSS technology," Schwartz wrote. "Thus, its content is 'pushed' to subscribers. This Web site is a tremendous vehicle for the broad delivery of timely and robust information about our company. ...
"We encourage you to look to the Internet to achieve the (SEC's) objectives of greater investor access to information," he told Cox.
Schwartz's letter didn't specify how many people read his blog, as opposed to the Web site in general, so more data would be needed to determine whether it meets the criterion of broad distribution under the regulation, in the SEC's view.
Schwartz, who recently started publishing his blog in French and nine other languages, has said it attracts 50,000 viewers a month. For him, he says, it has become "the single most effective vehicle to communicate" with investors, journalists and analysts.
Thirty Fortune 500 companies are now publishing corporate blogs, nearly double the number in December 2005, according to the Fortune 500 Blogging Wiki, a collaborative tracking site. Technology companies such as Amazon.com Inc., Cisco Systems Inc. and Oracle Corp. were early adopters, but senior executives at big industrial companies like Boeing Co. and General Motors Corp. also have embraced the trend.
In its unfiltered form, blogging allows CEOs to bypass the public relations department, journalists and industry analysts and speak directly to the public. Few company blogs are written by the chief executives, however.