August 26, 2002
Via E-Mail and Federal Express
Jonathan G. Katz - Secretary
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549
Re: Release Nos. 33-8106; 34-46084; File No. S7-22-02
Ladies & Gentlemen:
PR Newswire Association LLC submits this letter in response to the Securities and Exchange Commission's request for comments on its Proposed Rule: "Additional Form 8-K Disclosure Requirements and Acceleration of Filing Date."
PR Newswire pioneered the immediate, simultaneous electronic distribution of full text press releases to news media in 1954. Today, operating around the clock, 7 days a week, PR Newswire accurately, quickly and cost-effectively transmits information received directly from the issuers of that information to thousands of print, broadcast, wire and online news media, the investment community and individual investors in the United States and overseas. Today, over 97% of companies trading on the New York Stock Exchange, NASDAQ and the American Stock Exchange choose a commercial newswire, such as PR Newswire, to distribute material news. During peak financial reporting periods, PR Newswire processes more than 1,000 time-critical press releases per day1. PR Newswire also provides to its news-issuing clients (members), which include more than 6,000 publicly owned companies, the latest in multimedia tools to assist them in disclosing their sensitive news to the public. These tools include audio and video webcasting of earnings conference calls, annual meetings, news conferences, investor meetings and other events. PR Newswire offers access to 22,000 media outlets worldwide, nearly 50,000 registered journalists, and up to 3,600 websites, which include major consumer and investor portals, online publications and news sites, and equities trading and industry-specific sites with a cumulative audience of more than 100 million visitors monthly. Through the financial portals, like Bloomberg, Dow Jones and Reuters, news is actively pushed to millions of professional investors where it is often commingled with other analytics to facilitate sifting through vast quantities of information that are necessary in making day-to-day investment decisions. Retail investors are actively alerted to corporate news through the media but also through their own direct access to many heavily trafficked portals like Yahoo!Finance, AOL, and www.msn.com that carry the PR Newswire feed.
PR Newswire appreciates the opportunity to comment on the Proposed Rule, as it will have a significant impact on the way disclosure, which is PR Newswire's primary business, is made to the marketplace.
PR Newswire applauds the Commission's efforts set forth in the Proposed Rule. By increasing the material events that need to be reported and the speed with which they are reported, the Commission has taken a positive step toward more market transparency. In today's difficult economic environment when the investing public looks to the companies in which they invest for the utmost openness and fairness, we believe that it is important that news disseminators, such as PR Newswire, work together with the Commission as markets begin to restore, and seek to maintain, the confidence of the investing public. It is not acceptable in the current climate (or, indeed, at any time) that only a select few have access to the latest material information on a public company.
PR Newswire agrees that the events described in the Proposed Rule are events that are presumptively of such importance to investors that prompt disclosure is required. When an issuer is required to disclose material corporate information under the Proposed Rule, the issuer must file a Form 8-K with the Commission within two business days after the event triggering the Form's disclosure requirements. We do not believe that the filing of a Form 8-K via EDGAR, by itself, achieves the goal of providing investors with timely access to material corporate information.
When an issuer files a Form 8-K with the Commission, the only way that information will reach an investor will be if the investor knows in advance when to anticipate the disclosure in order to look for it and knows where to find the information. Also, an investor must be able to access the SEC website or a site carrying EDGAR content. We believe that the visibility of sites carrying EDGAR content is extremely limited when compared with major news and financial portals. While the internet continues to reach a growing segment of the investment population, in the U.S., an internet posting alone excludes approximately one-half of the population1, and investors outside the U.S. are even less likely to have access to web-based information. The internet is only one component of full, fair and simultaneous disclosure. A release issued through a newswire service will reach not only the internet community but also numerous media outlets as well, ensuring the broadest possible disclosure.
Allowing the filing of a Form 8-K, in and of itself, to satisfy the disclosure requirements of the Form 8-K items, would reduce the reach of the disclosure requirements by not getting the broadest possible dissemination of the information to the investing public. Furthermore, because press releases do not need to be "EDGAR-ized" and are not dependent on the limited hours of the Commission's EDGAR system, press releases generally provide prompter and more widespread disclosure than do Form 8-K filings. Requiring investors to visit the EDGAR web site and search through documents company by company is time-consuming and inefficient for any investor who requires ready, immediate access to information. 2 As with other corporate disclosure items, an 8-K filing, in tandem with a news release distributed by a commercial newswire service and posted to the issuer's website, will, in our view, fully address the desired goals.
In order to promote the broadest possible dissemination, we suggest that an issuer filing a Form 8-K also be required to issue a widely disseminated press release to traditional media outlets and on-line news service providers. This time-tested method is actively embraced by the companies that issue news and by the investors, both retail and institutional, that demand this information.
Moreover, before any corporate release is issued over PR Newswire, it undergoes a stringent verification process to ensure that the story is issued by the appropriate corporate entity. Our editors follow a procedure whereby they only accept releases from an individual at the company who is authorized to issue releases. PR Newswire then contacts each client at an authorized phone number to ensure that we have reached the right individual before the story is issued. The breadth of coverage of this corporate news, coupled with the verification processes that PR Newswire maintains to ensure the integrity of each story, makes this news a time-tested, critical source of information that is actively embraced by the investing public.
How broad a dissemination of the release should be required? It is our view that the scope of the dissemination should correspond to dissemination that the issuer normally effects with respect to its results of operations. In addition, we believe that disclosure through a press release should require prompt dissemination of the full-text of the press release as written by the news source. Dissemination to the public of an edited press release or of a press release which is distributed on a piecemeal basis provides limited and selective disclosure in contrast to the information obtained by those who have the original statement with complete information.
PR Newswire is pleased to confirm to the Commission that, based on our experience serving the financial and investor relations requirements of thousands of America's large and small publicly-owned corporations, most financial and investor relations professionals are familiar and comfortable with the new technologies of PR Newswire and other disseminators of public information and are trained and eager to use these facilities to meet the needs of their shareholders and the investing public.
For almost 50 years PR Newswire has been privileged to assist publicly-owned corporations fulfill not only the letter of their disclosure obligations, but the "spirit" of disclosure as well. The far-reaching distribution provided by PR Newswire levels the playing field for investors worldwide, by providing access to material corporate information from verified sources. In the current marketplace, this type of broad, timely distribution is not only necessary, it is expected by the investing public.
We hope that the Commission will find our comments helpful.3 The undersigned would be available at the Commission's convenience to discuss further any aspect of these comments.
PR NEWSWIRE ASSOCIATION LLC
By: /s/ Charles H. Morin
Charles H. Morin
Chief Executive Officer
|1||"A Nation Online," February 2002, Study by U.S. Commerce Dept. See http://222.esa.doc.gov/508/esa/nationonline.htm.|
|2||An additional problem with using EDGAR in connection with the Form 8-K items, at least at the present time, is the time lag that sometimes occurs between the filing of the Form 8-K with the SEC and the time the disclosed information is actually put up on the SEC website. Currently, to our knowledge, this time lag can be up to approximately 24 hours. Such a time lag is contrary to the Commission's goal of instantaneous disclosure to the investing public.|
|3||Please note that we have filed substantially similar comments in a letter dated the date of this comment letter regarding Release No. 34-46288, File No.: SR-NASD-2002-85.|