Jonathan Schwartz, avid blogger and chief executive of Sun Microsystems Inc, has asked the Securities and Exchange Commission (SEC) to allow companies to disclose significant financial information through blogs.
With a growing number of major companies now publishing corporate blogs or online diaries, and an SEC chairman with a penchant for technological innovation, Schwartz is making the case for blogs -- including his on the Sun Web site -- as a way to expand investors' access to information.
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, or 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."
In a Sept. 25 letter to SEC chairman Christopher Cox, Schwartz said that the Web site of the Silicon Valley server and software maker, 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 Sun employees.
"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 doesn'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.
Regulation FD in its current form "contemplates Web-based disclosure, and that's why the rule does not proscribe any particular method of dissemination -- so long as it is broad and non-exclusionary," SEC spokesman John Nester said on Friday.
Schwartz, who started publishing his blog in French and nine other languages last month, 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 last year, 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. Yet few company blogs are written by the chiefs.