SEC lets Nasdaq firms release data on Internet
WASHINGTON, Feb 2 Federal securities regulators, recognizing the importance of the Internet as a means of getting corporate information out to the public, approved a rule allowing Nasdaq companies to release data on their Web sites as well as through traditional news media.
However, under the new rule, which goes into effect in mid March, the companies cannot post anything ahead of notifying the press outlets, Nasdaq's parent, the National Association of Securities Dealers Inc, said of the rule change it proposed last October.
Those traditional news outlets include Bloomberg Business News, Dow Jones & Co Inc (NYSE:DJ - news), and Reuters Group Plc (quote from Yahoo! UK & Ireland: RTR.L) (Nasdaq:RTRSY - news).
The rule was approved on January 28 by the Securities and Exchange Commission, a NASD spokesman said, and it becomes effective within 45 days of that approval date.
''The increased use of the Internet to provide access to corporate information for shareholders has resulted in questions regarding the timing of news releases over the Internet and the use of the issuer's Internet site as a replacement for traditional dissemination of news to the media,'' the self-regulatory group said.
''Nasdaq fully supports companies' use of Internet home pages to disseminate information to shareholders, but that the Internet must not be a substitution for traditional dissemination.''
Current rules say that Nasdaq companies must promptly tell the public through the news media about any material information which could affect the value of their securities or influence investors' decisions, except in ''unusual circumstances.''
NASD said those circumstances include situations where ''immediate public disclosure would prejudice the ability of the company to pursue its legitimate corporate objectives.''
The new rule change says that companies must still notify Nasdaq at least 10 minutes before the release anywhere of potentially market-moving information, which could range from a merger, acquisition or joint venture to earnings and dividends of an ''unusual nature,'' NASD said.
The Nasdaq exchange is home to highly volatile Internet-related companies, and lately it has become par for the course to see those companies' securities undergo sharp spikes and dips in a single day.
Sometimes if there is unusual activity in a company, Nasdaq, through its MarketWatch Department, will institute a trading halt, usually about 30 minutes long, that ''decreases the possibility of some investors acting on information known to them but which is not known to others,'' NASD explained.
A halt provides the public with an opportunity to evaluate the information and also alerts the marketplace to the fact that news has been released, the group added.
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