After 29 years of loyal government service, Tuesday will go down as a sad day for Edgar. That's the acronym the Securities and Exchange Commission uses for its Electronic Data-Gathering, Analysis, and Retrieval system --a digital data dumping ground that is often seen as the place where financial reports go to die.
Not only is this Byzantine database a lawyer's paradise, where even the simplest of updates come with a pile of disclaimers and legalese, but its obscurity makes its actual usage relatively small, at least compared to the billion people who use Facebook (FB) or the 400 million tweets that stream across Twitter every day.
By authorizing public companies to use social media, the SEC has now, in the words of Forbes magazine, entered the 21st century. Not willingly, of course, they were dragged there, following an unspectacular Facebook posting 9 months ago by Netflix (NFLX) CEO Reed Hastings.
If you thought the process was excruciating, wait until you see the outcome. In allowing social media to be used to disseminate what's known as "material information," the SEC has required companies to let investors know "where to look for it" to keep the playing field level.
But the problem is there will always be debate over what actually is material (or market moving information) and what is simply blather from the guy or gal in the corner office. There's also some vagary as to how it will apply to other lesser known social media sites and who will enforce it, especially among the thousands of minuscule public companies that exist and are known havens for market manipulation.
What struck me in the immediate aftermath, was the one article that Reed Hastings chose to link to on, where else, his Facebook page. It's by Forbes contributor George Anders and highlights some of the the challenges the SEC faces in its attempts to regulate information in the digital age.
"Listing every conceivable website or social network that might occasionally hold material information is a way of conforming to the letter of disclosure law, while deluging investors with so much chaff that no one benefits at all."
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