BGC Partners, Inc. (NASDAQ: BGCP), a small-cap inter-dealer broker of financial instruments, is taking the bold step of using the notice-and-access approach with its next earnings release on February 26 — but I think they should reconsider.
On Monday, the company issued a news release announcing the following:
“In compliance with the U.S. Securities and Exchange Commission’s (“SEC”) recent guidance regarding “notice-and-access” news releases, the Company plans to discontinue issuance of full-text financial news releases via a wire service and will issue only advisory press releases notifying investors when new and material information is available on its websites. BGC Partners plans to issue an advisory release after the close of market on Thursday, February 26, 2009, notifying the public that a complete and full-text financial results press release has become accessible at the “Investor Relations” section of www.bgcpartners.com. The complete release will also be available directly at any of the following web pages:
www.bgcpartners.com/ir
www.bgcpartners.com/ir-news
www.bgcpartners.com/news-centre/press-releases”
There’s no mention of the precise time the release will be made, only that it will be “after the close of market.” That’s not good practice since investors who want the information shouldn’t have to guess.
Thomson Reuters’ IR website platform isn’t ready for it
While I applaud BGC for making such an obvious move that will save money and give the company the opportunity to better engage its investors, I have many concerns about the company’s preparedness and its ability to accurately document its electronic disclosure process.
Monday’s news release itself suggests they are not familiar with the technical issues that bedevil disclosure on the web.
Notice how none of the URLs they provided contain the HTTP:// prefix. It’s well known that for URLs in distributed releases to be converted to active hyperlinks on disparate systems, it is important to include the prefix. Indeed the links in the version of the notice on the company’s own website were not active.
And that is just the start. BGC outsources its investor relations website to a unit of Thomson Reuters, which hosts several thousand IR websites of US companies. While I expect that Thomson Reuters’ servers will cope with the additional burden of investors all rushing to one place for the news, I have serious concerns that BGC will be exposed should something go wrong.
For example, there is no time-stamping or change log built into Thomson Reuters’ product. Their RSS feeds have been implemented poorly, including faulty time stamps. All items show the same entry time, as you can see in the screenshot below. This problem affects thousands of companies that are using Thomson Reuters’ and Shareholder.com’s platforms.
Meanwhile, these cookie-cutter platforms are notoriously inflexible, making it hard for clients to post information in the way they want and at a precise time they desire unless they do it manually.
I’ve railed against U.S. IR departments outsourcing their IR websites since the day I started this site. It’s a peculiarly U.S. thing, and there are many more issues I could list to show that Thomson and Shareholder.com’s products are not ready for the SEC’s website disclosure guidance.
Under a microscope from powerful interests with much to lose
Meanwhile, BGC will be under a microscope by the PR wire services, particularly Business Wire.
When Sun Microsystems, a network computing infrastructure company, did a trial of web disclosure in 2007, no less than Cathy Baron Tamraz, President and CEO of Business Wire, sat on Sun’s IR website hitting refresh constantly to get the news.
She then slammed Sun publicly in a blog post, saying its servers had crashed (not true) and that there was a long delay before news hit Yahoo! Finance (also not true).
Yesterday, Reuters journalist Robert MacMillan accused BGC of being “opaque” in its disclosures, even though the company hasn’t yet used the process and he doesn’t have any basis on which to comment — yet.
I think MacMillan isn’t being kept well informed on the topic because he went further to say that there is nothing to prevent companies from burying information on their websites, which isn’t the case, as the SEC’s guidance makes clear.
And again, Business Wire didn’t lose time linking to MacMillan’s post. As I said earlier this week, they’ve launched a concerted PR offensive to stop their clients cutting their bills using notice-and-access releases. There’s a lot of money at stake.
The fact is, there are very powerful interests with deep, but threatened pockets that would love nothing more than to see BGC fail in its first notice-and-access release.
The detractors will be out in force, and who knows who will be sitting on their computers hitting BGC’s website on the day?
Twitter Comment
Reading intrsting piece @ start of web earnings release and pitfalls: Wires aren’t dead yet as co’s struggle with tech. [link to post]
– Posted using Chat Catcher
A couple of things:
First, the http thing is an easy fixed, and already noted.
Second, it would not have made sense for us to say in the release you quote above the EXACT time the release will come out – because we don’t know yet. We aim for 4:00 PM, but it might be 4:15 or 4:30. This is why we specifically say in the above release that WHEN the release is available on our websites, we will issue an advisory release over a wire service alerting investors that the information is available. Thus, everyone will know exactly when we post the information, so your second point is confusing to me. Perhaps I am missing something.
Third, Thomson has emailed all of its clients assuring them that their outsourced IR sites can in fact handle the traffic. Nonetheless, we will provide three links in our “notice and access” news releases – one to internal website, two to Thomson. This is also the case above. Hence, there is a backup in case something does go wrong, and we are doing both as you recommend and as Thomson recommends.
I would be happy to discuss this with you further. Thanks.
[...] Jones of IR Web Report expresses a few other concerns regarding BGC’s readiness, mainly regarding the limitations of IR web site template [...]
Hi Jason,
First, I think people should know that you tried to contact me a couple of weeks ago, but the communications got mixed up.
Second, I wrote this piece to draw Thomson and Shareholder’s attention. They need to get their acts together for web disclosure. I’m not concerned with their sites going down, I’m concerned for their clients being able to show an audit trail in the event of a dispute.
Third, my comment about there being no time specified applies to any company, whether it is doing notice and access releases or full-text. The PR wire services are not simultaneous, so some investors will get the notice about the full-text release ahead of others.
It’s unfortunate for you that BGC is the focus. Other companies have already done this with no problems. But they asked me not to name them because they worry about the wires “doing a Sun” on them. Which is happening to you right now.
You have all my support, but I hope Thomson realizes that its reputation is now on the line, too.
identi.ca Comment
BGC Partners $BGCP responds to my post on their new web disclosure process in comments. [link to post]
– Posted using Chat Catcher