By Dominic Jones
WHAT year is it? If you spend your life with your head buried in the New York Stock Exchange’s (NYSE) Listed Company Manual, you might be in a 10-year time warp.
Last week, the NYSE issued reminder letters to its listed companies about their disclosure obligations this annual meeting season. Those letters, one for U.S. companies (PDF 137 KB, 10 pages) and one for international issuers (PDF 129KB, 8 pages), include a reminder of the NYSE’s Timely Alert Policy.
That policy requires companies to immediately issue “a press release” when they have material information that could move their stock prices.
Even though the Securities and Exchange Commission (SEC) allows companies to use other mechanisms to meet Regulation FD requirements, such as public conference calls, webcasts, and Form 8-K filings, the NYSE says these other methods are not good enough.
It says a press release is “the single best way for a listed company to ensure the timely and widespread dissemination of material news.”
And just in case you missed the importance of “press releases,” the letters reiterate:
“Based upon historical experience, the Exchange feels strongly that its longstanding policy of requiring a press release for the dissemination of material corporate information is in the best interests of listed companies, as well as their current and future investors.”
Fine. A news release — sorry press release — it is. But here’s the thing that makes no sense at all (emphasis added):
To ensure adequate coverage, Section 202.06(C) of the Listed Company Manual states that press releases requiring immediate publicity should be given to Dow Jones & Company, Inc., Reuters America and Bloomberg Business News. A listed company is also encouraged to promptly distribute its releases to the Associated Press and United Press International as well as to newspapers in New York City and in cities where the company is headquartered or has plants or other major facilities.
That’s it. No mention of using the Internet to achieve “timely and widespread dissemination.” Not even news release wire services like PR Newswire or Business Wire are mentioned (not that I think they should be).
And, of course, company websites or RSS don’t feature at all.
Indeed, if you think about it, Bloomberg, Reuters and Dow Jones are primarily proprietary networks that favor their paid subscribers like well-heeled institutional investors.
And United Press International? Who carries UPI’s business news anymore? Yahoo! Finance doesn’t — and it’s the single most popular source for investors on the Web, retail or professional.
And “newspapers in New York City” and cities where the “company is headquartered or has its plants”? I wonder what CNBC or the Financial Times thinks about that?
How the NYSE’s policy achieves “timely and widespread dissemination of material news” to all investors without disadvantaging anyone is beyond me.
This policy is embarrassingly antiquated. I think it is time the NYSE, which seems destined to become the world’s first truly international stock market, woke up and smelled the Internet.
[...] then there is the fact that notwithstanding what the SEC says, the New York Stock Exchange has very specific preferences for news releases. Of course, now that the NYSE owns a wire service, it is in a bit of a conflict of interest [...]