From: Cathy Baron Tamraz
Mr. Robert Pozen
Dear Committee Chairman Pozen:
Business Wire welcomes the opportunity to comment on the SEC Advisory Committee's discussion paper focusing on opportunities for improving the financial reporting system.
As a general statement, Business Wire fully supports the Committee's overall objective of simultaneously seeking to simplify and strengthen the reporting process. In particular, we strongly endorse the need to make financial information more easily accessible to the entire investor universe, and to provide data in a flexible format that can be readily analyzed, leading to better-informed investment decisions.
For purposes of this comment letter, however, Business Wire will limit the scope of its remarks to its area of expertise: disclosure and news dissemination.
Business Wire agrees with the Committee's supposition that different classifications of investors have their own unique information requirements. However, Business Wire believes that the concept of a journalistic summary preamble to financial statements is inherently too restrictive to bring any real added-value to current disclosure practices, especially in today's news-driven, time-sensitive trading environment.
Full-text distribution, enabling investors to self-select data based on their own individual criteria, remains the most realistic solution to meet this challenge. Our shared objective is more information made freely available on an equal basis to the largest possible audience of investors. As such, a well-written news release provides a succinct overview of corporate actions and financial performance. News releases are clearly the universal information "currency" of choice for all strata of investors, and are, in effect, the heart of the disclosure process.
There is little doubt, in our view, that retail investors prefer full-text news releases as the primary vehicle to get an easy-to-access, and easy-to-understand, snapshot of company developments. Corporate releases spotlight--in most instances--relevant market-moving information, together with an explanatory narrative that provides both context and perspective. Individual and institutional investors alike rely on the news release as a quick-reference news and data digest. Studies done prior to Reg FD showed that, overall, investors prefer more information rather than less.
Most importantly, services such as Business Wire are available on thousands of web sites worldwide, including all major financial news portals, in real-time and at no charge. Today, global audiences can freely access price-sensitive news at the same split second as Wall Street professionals. What can be fairer than that?
It is important to note that simultaneity is a key issue in effecting full and fair disclosure. To that end, and recognizing the increasing importance of technology and the Internet, Business Wire was awarded a US patent in 2006 based on its secure and simultaneous "NX" internet news delivery platform.
Furthermore, Business Wire transmits in an XHTML format, a metatagged newsfeed that provides for better presentation of online financial data, coupled with increased user flexibility. Issuers are able to embed live links into their news release, creating unparalleled opportunities for investor communications. XHTML also allows for delivery to a variety of media applications, including computers, cell phones and PDAs. Key elements of a news story can be tagged so that recipients can cull out "summary" or key information.
The ubiquitous acceptance of the news release speaks to the Advisory Committee's desire to gain a better understanding of the integral relationship between information and the capital markets.
"The subcommittee may wish to consider the underlying reasons why press releases and web disclosures--and the information contained in them--are used by our capital markets in order to determine if additional performance indicators would be useful for our capital markets."
The reality is that information is the lifeblood of our capital markets, and investment decision-makers are keen to access as much relevant information as possible, in the most expeditious manner available.
Once again, the news release is the medium that unequivocally best meets these standards. In our view, corporate issuers should include all appropriate performance indicators, as identified by the marketplace, in their announcements. This price-sensitive data should be broadly disseminated, via a simultaneous, real-time distribution platform. In today's milli-second trading environment, a level playing field is more important than ever, with nearly half of all trades now triggered by program trading, according to some estimates.
It is for this reason that Business Wire has been so outspoken in the recent debate over web posting/RSS feeds as "disclosure." We passionately believe in the need for real-time, simultaneous disclosure, freely available to all potential investors on an unrestricted and equal basis. This simple premise is the backbone of our equitable financial markets, and should not even be subject to debate.
Populist proposals suggesting a combination of RSS feeds and web posting-- as a substitute for broad-based, real-time simultaneous disclosure--fails the Regulation FD litmus test, in our view. We are all for the use of RSS feeds (which we provide at no charge as part our multi-channel distribution platform), and any and all new media technologies that promote greater transparency and information access. We think it is flat out wrong, however, to tout a disclosure model in which simultaneity isn't guaranteed and, more importantly, isn't even technically possible. This is not what the investment public expects or wants, and it plainly isn't full or fair.
Lastly, the Advisory Committee discusses the obvious benefits of interactive data and the use of XBRL to achieve this goal.
Business Wire is a longstanding member of the XBRL International Consortium and is a joint venture partner in CoreFiling, a leading XBRL service provider. We are committed acolytes of Chairman Cox's XBRL initiative, actively promoting the adoption of XBRL to our own constituents. We eagerly anticipates the day when the SEC mandates its use.
In conclusion, Business Wire strongly believes in the benefits of simplicity, which coincides with the Advisory Committee's self-stated mission. Toward that end, the current disclosure protocol, where issuers have one-step access to a secure network that reaches the global investment community, including the web, in a real-time, simultaneous and cost-efficient basis, clearly works. Our model ensures full and fair disclosure of material information to all market participants, with the added benefit of a complete audit trail.
The European Union confirmed the viability--and validity-- of the existing disclosure model by mirroring many of its features in its recently implemented Transparency Obligations Directive.
With nearly a half-century of disclosure experience, coupled with a growing involvement with regulatory agencies in Europe and Asia, Business Wire would be honored to serve in a (voluntary) consultative capacity as the Advisory Committee begins work on its challenging mandate.
We stand ready to assist the Committee on its important mission, sharing our expertise and insights. Hopefully, we will prove to be an invaluable resource as the process unfolds.
Cathy Baron Tamraz