To date, the SEC has not taken the position that the Regulation's "widespread dissemination" requirement can be satisfied through disclosure through the web-postings alone. While that may have been a pragmatic approach in 2000, we believe that the proliferation of the Internet supports a new policy that online communications fully satisfy Regulation FD’s broad distribution requirement.Considering the regulation's objective -- to prevent selective disclosure of potentially valuable news and profiteering based on information asymmetry -- it seems a no-brainer to modify the rule to take advantage of the efficiency and reach of internet-based communications; Chairman Cox has consistently demonstrated that he's a big-brainer, so I'm hopeful that the proposal will be well-received at the Commission.
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In 2001, upon the one year anniversary of the effective date of Regulation FD, Commissioner Unger requested a study designed to assess the implementation of the regulation. (“Special Study, Regulation Fair Disclosure Revisited,” U.S. Securities and Exchange Commission, December 2001, modified November 29, 2003.) Even then, the roundtable group recommended that “the Commission should embrace technology to expand opportunities for issuers to disseminate information online. The Commission should make clear that options such as adequately noticed website postings, fully accessible webcasts and electronic mail alerts would satisfy Regulation FD.” (Id.) The evolution of the Internet makes these recommendations even more compelling today.
As Schwartz explains, the change "would permit our (and everyone else) using the internet (eg, a company blog or web site) to release material information. Without a press release or operator assisted conference call. We are, after all, the primary source of such material information - there's no point in going through an intermediary if what we're after is fair disclosure and full transparency." Kudos to Sun for taking the lead on an overdue rule change.