APPLIED Micro Circuits Corporation (NASDAQ: AMCC), one of the first companies to make use of the new e-Proxy process, is using cookies to identify and track people using the website hosting its annual report and proxy statement.
Under the Securities and Exchange Commission’s (SEC) rule for the voluntary e-Proxy process, “a registrant or its agent shall maintain the Internet Web site on which it posts its proxy materials in a manner that does not infringe on the anonymity of a person accessing such Web site.”
However, AMCC’s website uses a website tracking system that uses cookies to identify investors and then track their movements on its site. The tracking tools are provided by Shareholder.com, a subsidiary of Nasdaq Stock Market Inc. (NASDAQ:NDAQ). More than 100 companies currently use the tracking system.
The types of information companies collect is illustrated by the screenshot below, which is a sample of an individual website activity report that Shareholder.com clients can view using its “Pinpoint Intelligence” system. It shows the name of a website user and what materials they viewed on the company’s website, and when they did so.
The concern is that by comparing website activity with voting returns, companies could establish when and how investors voted their proxies. This could be used to compromise the vote or otherwise infringe on shareholders’ anonymity.
The tracking is typically not disclosed to investors. It works by loading a cookie, a small text file, on users’ hard drives when they register to access information or services on the site. The investor’s name is then associated with the cookie and the company can track and store information on what the person does on its website.
To illustrate the system, I registered to access AMCC’s RSS feeds using a fictitious name, Jack Sprat. This is shown in the screenshot below.
After registering, I navigated to AMCC’s proxy statement on its website. I then checked my browser to see what cookies were installed while I was viewing the proxy statement. One of the cookies clearly was being used to identify me as Jack Sprat. This is shown in the screenshot below.
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| The above image shows the cookie identifying me as Jack Sprat while I was viewing AMCC’s proxy statement on its website. The URL for the proxy statement is highlighted in yellow at the top of the picture. |
Based on my admittedly non-legal reading of the SEC’s e-Proxy rule, what AMCC is doing is a breach of the rules. If anyone has an alternative viewpoint, I’d be grateful if they would use the comment form below or email me directly.
Related items on this topic:
AMERCO’s shareholder forum, e-proxy (July 11, 2007)
My bad experience with first e-proxy notice (July 04, 2007)
SEC to go back on e-proxy usability? (June 15, 2007)
E-proxy: do it for love, not money (June 14, 2007)
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