Compliance &Ethics - Society of Corporate Compliance and Ethics

Featurecontinue to grow as the pace of regulationcontinues to grow, both in the U.S. and overseas.Social media costs, benefits, and risksmust be weighed in this global context. Evena quick overview of these large and complexregulatory schemes is mind-numbing.In fact, regulations have become so costlyand burdensome from a compliance standpointthat a recent law, the JOBS Act, includesprovisions that defer reporting regulationsand other regulations for certain kinds ofcompanies entering the on-ramp for initialpublic offerings.Otherwise, for SEC-reporting companies,Section 404 of Sarbanes-Oxley Act andRegulation FD, 2 which imposes certain disclosurerequirements on US-based companies(though not on foreign-owned companies),have an impact on disclosure and communications.In Europe,Solvency II isanother huge internationalregulatoryscheme designedto manage risksof insurer bankruptcy.It appearsthat implementationwill be delayedfrom the original2013 schedule, butthis is surely onlya reprieve, andaffects not onlycapital requirements, but financial reportingand disclosure. The Dodd Frank Act hasimposed new regulatory costs and requirements,and banks both large and small areconsidering the costs and impacts of Basel IIIregulation and reporting their assessmentsto the investing public. Timely, transparentcommunication of the kind enhanced bysocial media should be part of the solution tothese requirements.Like other forms ofelectronic communication,social media, including blogs,are of course discoverablelegally and are covered bySEC and FINRA rulesfor certain kindsof companies.Transparency is criticalMoreover, the organizations affected by theincreased regulation must communicate andbe transparent in a timely manner, accordingto commonly accepted reporting normsand these rapidly growing regulatory obligations.One reason, of course, is the informationdemands of sophisticated investors, donors,media, and third-party analysts, which mustbe met for an organization to be fairly valuedin the marketplace. The other reason is simplyto avoid the liabilities involved when publiccompany shareholders are not informed simultaneouslyof material information, or whenemployees are aware of serious misconduct.The value of a more interactive managementenvironment, which admittedly isemerging slowly, puts the cost burdens inperspective. For example, the true worth ofXBRL has yet to begrasped, but theoretically,taggeddata enables investorsto make betterdecisions, whichwould lower thecost for corporationsof obtainingcapital. That ofcourse would bea big plus for thebusiness community,includinginstitutional andretail investors. In addition, many userssimply may prefer interactive information to astatic PDF, table, or article.Also, powerful new platforms are loweringthe cost of social media monitoring. Systemupgrades (which are of course more expensive)can be handled as needs change. Corporateblogging technology configured for complianceand ease of use is available. So is accessto syndication services for many of the mostCompliance & Ethics Professional May/June 2013+1 952 933 4977 or 888 277 4977 www.corporatecompliance.org 43