By Dominic Jones
JUST popping in because the U.S. National Investor Relations Institute upset my sensibilities today when it reiterated the following policy to members about electronic communications:
NIRI advises companies not to participate in chat rooms. Companies should monitor the Internet for information about the company but should not respond to market rumors or participate in “chat rooms” about the company. Such responses may, under certain circumstances, be considered a form of selective disclosure. Company policies should be updated to address employees’ use of technology with regard to disclosure issues, including participation in Internet chat rooms and use of e-mail.
In other words, don’t talk to investors in chat rooms, period.
Not even if you identify yourself and don’t selectively disclose anything. Reaching out and talking to people, being accessible and building and maintaining relations with people online is taboo at NIRI.
The truth is there’s much greater risk that IROs and executives will selectively disclose information in one-on-ones and private group meetings with analysts and investors. Why aren’t those banned?
And how do we define a “chat room?” Does it include the SEC’s shareholder chat room proposal? What about blogs and their comment threads? Aren’t those chat rooms? Yes, they are.
A chat room is anywhere on the web where people communicate with one another. So this is like saying that Investor Relations shouldn’t talk to people on the Web — the single biggest, lowest cost, most international communication channel a company has.
This NIRI policy is obsolete and, quite frankly, a cop-out. There’s nothing to prevent company officers participating in online discussions if they do so responsibly and with good intentions. The same rules apply online as they do off-line.
Of course, if you’re not confident or competent enough to act responsibly in your communications with investors, online or off, then by all means stay away. But NIRI is not helping its responsible, competent members by reinforcing such myopic, comfortable, old-school, knee-jerk thinking.
Related:
Shareholder forums vs. board blogs
The emerging engagement expectation
Don’t treat small investors like they’re dumb
If retail investors don’t matter, IR is in trouble
Dominic, It sure sounds like you have recharged your batteries
Matt,
Yes, it’s amazing what a week can do. I’ve recovered enough that I am now capable of strong reactions. In a couple more weeks, I might be capable of some proactive forward thinking.
[...] NIRI Policy on Chat Rooms, Blogs, Message Boards, Email Outdated – IRWebReport.com Source IR Webreport [...]
I disagree. 1. The level of discourse on many message boards does not lend itself to a reasoned discussion of the issues.
2. By posting on a regular basis an IR officer would create the impression, if not the obligation to continuously monitor and update the message boards and frankly, who has the time?
3. It’s not worth the time, effort or risk. Message boards are dominated by individual shareholders, day traders and stock junkies. Collectively they don’t own enough stock to make much of a difference. It may sound harsh, but an IR officer needs to spend their time and effort where they will get the most return, and that is with institutional shareholders. You are not going to see large institutional shareholders on message boards because they don’t want their competition to get any insight into their investment thinking by tracking what questions they ask.
John,
I don’t completely disagree about message boards like those attached to the big investment sites. I wouldn’t rule them out, but I also wouldn’t spend a lot of time worrying about them, which NIRI says is not right. You should monitor them, just not participate.
The actual problem here is that NIRI reiterated this policy and lumped a bunch of technologies into it, including having the word “blog” in the headline for the piece in their email. John Mackey, a blogger as well, was being held up as an example of why companies should avoid these tools.
As a blogger yourself, you know that there’s a huge difference between the discussion that happens around blogs and what happens on message boards. Our discussion here is an example.
There are nuances that most busy IROs will miss when they get an email from NIRI reiterating a policy against participating in chat rooms under a headline that includes “blog” in it. I think NIRI was irresponsible not to take the time to think about the consequences of reiterating its policy, or asking if it is even relevant to blogs, SEC compliant shareholder forums etc.