SEC: The Evolving Regulatory Landscape

John White, Director Division of Corporation Finance, SEC
Monday, June 9 11:00am — 12:00pm

The four different initiatives focused on were:

Interactive data
The SEC released a set of rules passed last month that requires public companies to provide financial data in the form of interactive data. XBRL involves having unique software data tags (similar to barcodes) assigned to each element in a company’s financial statement, once you have a data tag assigned to each number you can use computers to access and manipulate that information. 15,000 data tags have been created for all financial data reporting covered by the GAAP. Domestic and foreign companies that use US GAAP are required to adopt it over a three-year phased in approach.

Interactive data will cause companies to hear from a whole new group of investors that were not able to analyze information in the way they are today. Analysis can be conducted instantaneously which will bring up questions and issues that were not mentioned previously.

E-proxy
It stands for electronic delivery of proxy materials (a.k.a. notice & access) that notifies shareholders that the proxy is available. As a public company you are required to make annual proxy materials available on the website. Two of the benefits are: 1) flexibility, since you can choose whom to send the paper to and whom to send the notice & access to, and 2) cost savings, with 50% of companies stating they would be willing to use e-proxies mainly due to the cost savings on print materials.

Commissions advisory committee on reporting
A committee was set up last August for the purpose of recommending proper reporting practices to publicly traded companies. The committee is mainly focused on interactive data and corporate websites. Corporate websites are incredibly important for investor communication therefore the SEC wants to further this type of communication. Companies need to recognize that when investors want more information about them they go to their website. He mentioned that companies can be doing more interactively on their website than in the past such as webcasts, earnings calls, and company blogs. The commission reminds companies that the website disclosures are no different than the print disclosures. It is all subject to the federal securities laws.

Corporate websites on blogs
Where do blogs fit into all of this? Today, blogs are a very attractive way to communicate with investors in a conversational form. Companies should be using blogs after careful planning on behalf on the company. Companies have to be focused on the liability issues and are urged to set up procedures for who blogs and ensure that the information is correct.