The SEC and Investor Relations 2.0

by

jacksmith

Gone are the days of one-dimensional, one-sided Internet use. Web 2.0 is upon us, where everything online is created, rated, and updated by the users. Facebook, Twitter, MySpace, Google, Yahoo, Digg, and StumbleUpon are among the many new tools of social communication. Take those communication methods mobile, and you have a world where the web can be updated any day, any time, from any location.

What is IR 2.0?

The concept of Investor Relations 2.0, often abbreviated as IR 2.0, stems from the transition of Web 1.0 to Web 2.0. Web 1.0 was the concept of the early Internet. Web 1.0 s only content was produced by official sources: government sites, newspapers, and companies. There was no option for the everyday Internet user to run a webpage or blog. However, over time, the web transitioned into a public communication tool in which anyone can post information online, communicate through a variety of portals, share opinions, and edit knowledge. With this advancement came the opportunity for companies to communicate to their customers more freely, to monitor these opinions, and to use Web 2.0 as a method of public relations and marketing.

And thus, IR 2.0 was born. Investor Relations 2.0 utilizes Web 2.0 to communicate to investors, monitor public opinion, and connect with their customers through social media tools such as Facebook, Twitter, and MySpace, and via public discussion forums such as blogs, podcasts, and discussion boards.

The concept of IR 2.0 is fairly new. In July of 2008, the Securities and Exchange Commission (SEC) publicly announced revised regulations that would allow Investor Relations to be taken online into the public forum. And though, these regulations were adjusted almost 2 years ago, very few companies are embracing this new financial communication tool, primarily because they are hesitant to cross boundaries set by the SEC.

The SEC wants you to use IR 2.0

Though regulations for using the web for Investor Relations have been in place for several years, a need for further clarification began to arise as the web transformed into an interactive tool. Therefore, in August of 2008, the SEC released a clarification of their guidelines regarding IR 2.0. This document further explained how information should be published on your site and in other online locations. In this report, the SEC stresses the importance of the Internet when it comes to Investor Relations, due to the fact that a large amount of investors have access to the Internet and use it to readily access company information. Because a company s website is an obvious place for investors to look for company data, public posting on a website may even be required for some publicly traded companies. In this report, it is also noted that the widespread availability of the Internet to investors makes it a media venue of public disclosure.

How to utilize IR 2.0 safely and effectively:

Keep your shareholders updated. If changes are made or new information is added, these changes must be noted on your company website, with links that will allow shareholders to view this information immediately.

Include your web address in all shareholder reports and forms, including a link that will take them directly to the page with new information.

Make sure your website is considered a public source according to the SEC s regulations, before posting public information. It is vital that the website is considered a public source for shareholder information sharing and it is easily accessible. Any additional use of IR 2.0 to spread financial news should follow after the information has become public on the website.

Add dates and time stamps to old material that was posted on your website to ensure that shareholders understand that this information is not reissued information.

Launch an IR 2.0 campaign

This is the updated world in which Investment Relations must exist and thrive. The world looks to these online financial communication venues for their information. Shareholders will receive company updates via their Facebook newsfeed or Twitter home page before they hear it on MSN. The only way to keep up with IR 2.0 is to play the game yourself.

Now is the time to begin IR 2.0 efforts for your company. Utilize your company website, blog, Twitter and Facebook account to enhance financial communication with your shareholders. Design an Investor Relations 2.0 program, and begin a whole new communication model for your shareholders that will surely gain positive attention.

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