It seems that blogs are trying to make a transition away from the simple person-next-door chronicling their activities, moods, likes, dislikes, and thoughts to the higher profile musings and strategies of business executives who want to communicate quickly to their journalists, investors, analysts and even customers.
In the beginning, the Securities and Exchange Commission forbade companies from providing important information to stock analysts and other Wall Street insiders ahead of the public. The rule required the method or methods used to be “reasonably designed to provide broad, non-exclusionary distribution of the information to the public.”
After the recent controversy with Sun Microsystems’ CEO and avid blogger Jonathan Schwartz raised questions in the headlines, the SEC clarified its stance on the issue just a tad, stating 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.
Thirty Fortune 500 companies are now publishing corporate blogs, nearly double the number in December 2005, according to the Fortune 500 Blogging Wiki, a collaborative tracking site. Among the companies with blogging leaders are Amazon.com, General Motors, and Boeing.
Schwartz’s blog entries evidently didn’t gel right with his company’s legal department, so tempers flared up and the SEC got involved to see if what he was documenting in his blogs was within legal guidelines. The SEC is allegedly “still looking into” whether Schwartz’s blog reaches enough people to considered “public.”
Schwartz penned a letter to SEC Chairman Christopher Cox amidst all the chaos, noting that “the Web site of the Silicon Valley, Calif., server and software maker, which gets an average of nearly a million user hits a day, includes the blog that he writes as CEO, as well as those of thousands of Sun employees.”
For now, everyone seems to be generally in agreement with Schwartz on the issue, although he does now put a safe harbor’ statement on blog entries that discuss future business strategies and products. This was to pacify his Sun Microsystems legal team.
Part of the controversy seems to stem from the fact that very few CEOs personally write blogs for everyone to read, bypassing PR departments and company lawyers’ legal recommendations for what information to release and how to word it.
“My blog is syndicated across the Internet by use of RSS technology,” Schwartz wrote in his letter to the SEC. “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.
Thus far, it doesn’t appear that Schwartz or any other CEOs will be restricted in what they write in their blogs. The SEC recently announced that they encourage companies and executives to release information on the Net so investor access is that much more available.
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Tim Ritter is a staff writer for Murdok covering technology and business.
