Monday Oct 02, 2006

One Small Step for the Blogosphere...

I've been an officer of a public company for a while, and I've had access to confidential information for a good while longer. And I'm used to holding my tongue on issues that'd be deemed material to Sun's financial performance. Like a pending acquisition or big sale, or data related to how our quarter's going. In a public company, there are very strict laws surrounding how information's disclosed.

So a couple years ago, when I first started blogging, I and our illustrious general counsel were far less worried about what I was saying, than where I was saying it. For example, I couldn't use my blog to announce our quarterly performance, or disclose a material transaction. I had to use a press release, or a conference call (with a telephone operator, no less!).


A regulation known as "Reg FD," or Regulation Fair Disclosure - which attempts to ensure no one audience gets preferential access to material non-public information. It's a great concept, designed to prevent selective disclosure, or actions that might advantage one investor over another.

Unfortunately, Reg FD doesn't recognize the internet, or a blog, as the exclusive vehicle through which the public can be fairly informed. In order to be deemed compliant, if we have material news to disclose, we have to hold an anachronistic telephonic conference call, or issue an equivalently anachronistic press release, so that the (not so anachronistic) Wall Street Journal can disseminate the news. I would argue that none of those routes are as accessible to the general public as a this blog, or Sun's web site. Our blogs don't require a subscription, or even registration, and are available to anyone, across the globe, with an internet connection. Simultaneously.

Now we happen to have a like-minded Chairman at the United States Securities and Exchange Commission (the 'SEC'), Christopher Cox. So Mike and I sent along a rather formal note last week, requesting a clarification to Reg FD, one that would permit our (and everyone else) using the internet (eg, a company blog or web site) to release material information. Without a press release or operator assisted conference call. We are, after all, the primary source of such material information - there's no point in going through an intermediary if what we're after is fair disclosure and full transparency. Let the light shine in, don't buy a flashlight.

We've had enough interaction with the Chairman (and read enough of his writings) to know he understands the utility of the internet to inform investors - but until we see a formal revision or clarification to FD, we'll still be limiting what we disclose via blogs and the internet. And consuming trees with press releases. Which can't, in the long run, be all that desirable.

But we'll take it one step at a time...

I've attached the letter below (and yes, before you ask, we did fax it, and send by overnight mail).


Via Fax and Federal Express

September 25, 2006

The Honorable Christopher Cox
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

Dear Chairman Cox:

You have been a leader in the drive toward bringing greater transparency and access to information for individual investors. Indeed, you recently challenged us to the capitalize on the full potential of the Internet for the benefit of the American investor: "So the question for us today is how do we put the current communications technology to the service of the American investor. How do we harness the Internet which is serving so many customers in so many other ways to deliver the maximum benefit to those in our regulated capital markets." (Chairman Cox Remarks to Interactive Data Roundtable, June, 12, 2006).

Sun Microsystems fully supports and applauds your recognition that the Internet is a "great instrument of national and international communication... [and] also a critical engine of American productivity." (Id.) We have been on the same side of the issue from a technology perspective - from the evolution of open standards for document interchange (such as the Open Document Format), identity interchange (Project Liberty) to the drive toward open source (OpenSolaris and OpenOffice). Our view is that now is the time to fully exploit the innovation that only the Internet can yield in creating the most transparent environment possible for keeping all investors promptly and equivalently informed.

As adopted, Regulation Fair Disclosure's requirement of widespread dissemination can be met through the filing of a Form 8-K or "through another method (or combination of methods) of disclosure that is reasonably designed to provide broad, non-exclusionary distribution of the information to the public." (17 C.F.R Sec. 243.101(e)(2)) To date, the SEC has not taken the position that the Regulation's "widespread dissemination" requirement can be satisfied through disclosure through the web-postings alone. While that may have been a pragmatic approach in 2000, we believe that the proliferation of the Internet supports a new policy that online communications fully satisfy Regulation FD’s broad distribution requirement.

Our corporate website ( currently receives on average of nearly a million hits per day. This website includes a blog that I write as CEO of Sun Microsystems (, as well as the blogs of over 4,000 of our other employees. My blog is syndicated across the Internet by use of RSS technology; thus, its content is "pushed" to subscribers. This website is a tremendous vehicle for the broad delivery of timely and robust information about our company. It is our view that proprietary news outlets are insufficiently accessible to the broad majority of Internet users and individual shareholders. It is certainly the case that the Internet represents a broader user base than those able to afford subscriptions to traditional forms of media and thus usage of this or any other freely available company blog or web site should be considered sufficient in satisfying the objectives of Regulation Fair Disclosure.

In 2001, upon the one year anniversary of the effective date of Regulation FD, Commissioner Unger requested a study designed to assess the implementation of the regulation. (“Special Study, Regulation Fair Disclosure Revisited,” U.S. Securities and Exchange Commission, December 2001, modified November 29, 2003.) Even then, the roundtable group recommended that “the Commission should embrace technology to expand opportunities for issuers to disseminate information online. The Commission should make clear that options such as adequately noticed website postings, fully accessible webcasts and electronic mail alerts would satisfy Regulation FD.” (Id.) The evolution of the Internet makes these recommendations even more compelling today.

We truly believe in the utility of the Internet - as a means of driving transparency throughout all governmental and corporate processes, as well as greater accessibility of health care, education and social services. Indeed, it is a principle on which Sun Microsystems was founded. We encourage you to look to the Internet to achieve the Commission's objectives of greater investor access to information and would welcome the opportunity to further discuss with you our views in this area.


Jonathan Schwartz
Chief Executive Officer
Sun Microystems, Inc.

cc. Michael Dillon, General Counsel, Sun Microsystems, Inc

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Hello Jonathan, Yes, it is indeed great that CEOs such as you are changing the world of Blogospheres - the Blog has become such an important channel to reach out to your customers. -- Thyaga

Posted by Thyaga on October 02, 2006 at 03:33 PM PDT #

Your blog also doesn't have the overhead of the first couple of paragraphs talking about forward looking statements. I, for one, very much appreciate that.

Posted by Glynn Foster on October 02, 2006 at 03:49 PM PDT #

Hi Jonathan, That's a good start to take this blogging platform to next level and cut down the old media style communication. The way web 2.0 is emerging i think this is inevitable that most of the coomunication to customers, shareholders an dother involved players will be via blogs. By sending this letter you hav demonstrated that SUN is realy changing the way it conducts its buiness now and just using this as a marketing platform.

Posted by Vishal on October 02, 2006 at 05:40 PM PDT #

This makes all the sense in the world. The one question that I have relates to archiving the blog info. It is one thing to publish information. It is another to be able to find it at a later date. I have confidence in SUN. My concern is the rest of the world. How do we address that? Thanks for setting the example. Gary

Posted by Gary McGoffin on October 02, 2006 at 06:16 PM PDT #

My blog is syndicated across the Internet by use of RSS technology; thus, its content is "pushed" to subscribers.

Errr... it's pulled by subscribers. Subscribers(their feed readers) fetch RSS feeds.

Posted by Carlos Andrade on October 02, 2006 at 07:54 PM PDT #

Information hates to be rubbed by the middleman. Traditional news media have done their part in serving the public. But now they only hinder information access. It's time for them to get out of the way. SEC needs to go with the flow.

Posted by Zaiyong Tang on October 02, 2006 at 08:08 PM PDT #

Gary makes a good point about the reliability and durability of the source. Having an intermediary (the press, here), makes it more difficult to rewrite things afterwards. And would you answer questions on your blog as in a press conference? P.S. RSS isn't a "push" technology, your subscribers pull your feed, exactly as they pull pages from your web site ;-).

Posted by François on October 03, 2006 at 12:36 AM PDT #

Excellent letter.. and I agree with your sentiments on Selective disclosure. The traditional manner is not more effective than what is available via the internet, and allowing disclosures to take place on the net would certainly benefit the stakeholders. Gary has a good point. If such disclosures were limited to something like a blog without also adding them to another reference location then there would be a risk of loss of that data. If there is any reform in the issue hopefully they would adequately address that.

Posted by Justin on October 03, 2006 at 01:40 AM PDT #

RSS & Email newsletter is most effective way to inform Investor. Being an investor in India, when i try to find correct information about any Public listed company, it is possible to get news by going NSE/BSE site & reading corporate announcement. SEC (& SEBI in india) can play effective role by emphasizing Online trading provider & Depository Services providers (who provides Demate facility) FOR providing RSS feed for each trading security. This would give access to each & every investor (i.e. investor of same day). Provide such service by each public listed company could generate fully new business oppertunities in IT services - but how could company get list of current investor everyday. In india, still we get ballot form by post(letter) for major corporate decision in any company. Isn't it time now to have similar platform through Internet Technologies? Isn't it time to make Email Address compulsory for each investor? Vijay.

Posted by Vijay on October 03, 2006 at 02:54 AM PDT #

Free Speech is always constructive when it addresses the controversial issues that everybody want you to avoid (like, for example, the lack of adequation between innovation and sales results, or the convergence between unlawful practices and huge recurring revenues based on forced sales of non-innovative products and an abnormal ability to avoid the consequences of decisions of Justice). I am afraid that as long as the basis of what makes this business flawed (from an open market point of view) is not discussed and addressed then the trend (causing a software publisher to be ranked too far ahead of any of its competitors despite deceptive products and behaviors) will not change. Since the gardians of the temple failed in their mission this industry has no other choice but to find -or create- a way to put in place the basis of an alternative eco-system based on merit rather than on the sole power to abuse others (because at this game there is no [good] surprise for consumers). Anyone interrested in pursuing this goal is welcome to drop me a line.

Posted by Pierre GAUTHIER, CEO and President on October 03, 2006 at 05:00 AM PDT #

Reg FD must be frustrating at times. But allowing Atom/RSS to play a part in the disclosure rules ignores the problems associated with truly simultaneous disclosure... here's some more detail.

Posted by John Turner, CoreFiling on October 03, 2006 at 09:23 AM PDT #

You've set up a strawman: In this Internet Age, press releases are no longer limited to dissemination by the Wall Street Journal. In today's world, public companies issue their press releases first through disseminators such as PR Newswire and Business Wire. These are picked up by freely available Internet sites, such as Since is an agregator, I can see on my customized home page at a glance all new press releases from the public companies I am interested in. If companies were to post the information to their employee's blogs, it would be much harder for me to track the information I need as a technical journalist.

Posted by Ralph Grabowski on October 03, 2006 at 09:56 AM PDT #

re: "One Small Step for the Blogosphere..." we know now it should be, "One Small Step for *a* blogger..." ref:

Posted by Russ Petruzzelli on October 03, 2006 at 03:50 PM PDT #

Great stuff Jonathan. I was asking Mike if he could share the letter on early Monday morning so it was great to see you post this blog with the actual letter here. I keep telling people that you and Mike are the only CEO and GC that blog. And, at the moment, you guys truly set the benchmark. You rock. Keep up the great posting and good luck with Sun.

Posted by kempton on October 03, 2006 at 04:02 PM PDT #

Hi Jonathan. We have run into Reg FD extensively in our work on the New Media Release, which is a Microformat for a Traditional Press Release that takes full advantge of the unique aspects of this medium. At present we are working on a draft specification which we hope ot announce soon and are also looking at other ways we can further support official communications over the Internet. We look forward to supporting you in whatever way possible. The group includes prominent PR agencies, academics, bloggers, journalists and representatives from all the major news wires. This is exciting news. Thanks Jonathan.

Posted by Chris Heuer on October 03, 2006 at 04:08 PM PDT #

Good idea. It ensures that sustainability and timely access obligations are held by the authority for the resource. It also means some CEO's may actually have to learn how to write. :-) I wonder what the rules for private companies are. Just curious.

Posted by Len Bullard on October 03, 2006 at 07:50 PM PDT #

What you are doing at Sun is really great.
Keep up the good work.

Posted by Mayuresh Kathe on October 04, 2006 at 07:31 AM PDT #

My concern regarding your proposal centers around the issue of identity management and safeguards surrounding Internet forums. Someone who manages to gain access to your account may be able to cause material damage to the company and to investors by posting comments which are purportedly official. Since this information would be quickly propagated into other forums, it would be difficult and slow to correct the flow of misinformation, allowing ample time for criminals to profit. Traditional news releases, conference calls, etc. make it much harder for criminals to impersonate company officials. A content validation mechanism should be put in place before any Internet forums are considered to be Reg FD compliant.

Posted by Eric Lowe on October 04, 2006 at 09:06 AM PDT #

Jonathan, this is an excellent move by the Corporation !! YEs, its a small step for blogsphere and its in the right direction !!

Posted by /PD on October 04, 2006 at 12:20 PM PDT #

Jonathan, I was advised about your blog today by our marketing partners. We, share many things, including the "sun" (our company is in the field of solar energy), public domain (we became public this week), a CEO blog (i was given this tool as " ceo venting therapy"). Yet most of all, I find myself thrilled to read that finally someone is putting to the "trads" some reality checks in terms of how the "social media" is in fact taking up market share faster than given credit for and in fact can be a very real part of information dessimation for a public company. I think the challenge is in fact the "freedom" of social media and who would "regulate" what is written. If you are proposing that the market self-regulates (ie. the public that is mistreated by the corporation's CEO loses trust in that person and company so the notion of care and discipline is present) I would suggest we'd need to take a crawl, walk, run approach in order to show how it could work. However, I guess the issue becomes one of power, like so many others, as the "free internet" battles with the "paid or opt in" models of releases. More power to you for opening this up and your letter. If you'd ever love to chat about this or other things, you now have my email and blog. Sun regards, Sass Peress

Posted by Sass Peress on October 04, 2006 at 06:39 PM PDT #

Fantastic use of your position as the pre-eminent CEO blogger, Jonathan. I'm hoping that you get a thumbs up on this one. When so many companies are caught hiding what they are up to, it's good to see a company pushing for greater transparency and immediacy of communication. I probably shouldn't say this, but... it forms an interesting counterpoint to the HP leak scandal.

Posted by Tim O'Reilly on October 05, 2006 at 12:23 AM PDT #

Congratulations on being the catalyst for what must be an inevitable acceptance of the speed and universality of the Internet and the blogosphere. Given that the Internet exists, it seems to me that the burden of proof is on the other traditional news channels to show that they do not favor particular audiences. News feeds of course provide instant alerts to all who wish to know. Blog search tools such as Google Blogsearch will know and display it within an hour. Why would anyone fight this, except if they have vested interests in the existing more restricted channels.

Posted by Barry Welford on October 05, 2006 at 02:43 AM PDT #

Jonathan, I thought this nuts at first, but if you know you will release material information at a specific time and URL, and you've told investors you will do so sufficiently in advance using your website, email and RSS then it would be extremely difficult for someone to claim they didn't know. But I still don't think you can use a blog or website for unscheduled material disclosures, at least not until you have your own newswire or similar tool. Now if Yahoo! Finance picked up your RSS feed as an official news source instead of the newswire service, you'd have that newswire. Really interesting topic, and great timing.

Posted by Dominic Jones on October 05, 2006 at 02:58 AM PDT #

It is a good idea to ensure the technical issues for blog-based releases are documented and solved. Tim Bray has posted some suggestions. Blog-based release should only be one release means given technical issues that may be insoluable, but as I noted, this approach ensures that the authority for the resource bears responsibility for its reliability and sustainability. Given Sun's deep technical capabilities, it is reasonable to assume that this is well within Sun's capabilities and similar computer systems companies as well. Some companies will have to employ or contract with similar providers and that is a business opportunity, but it indicates the Internet cannot be the only means and coordination or business workflow issues must be detailed in SEC ammendments to the regulation. It is a good idea. It might not be ready for prime time. Sun should prepare and publish a white paper that examines this proposal from all angles and documents solutions to the obvious and not so obvious challenges. It will be helpful if the paper is free of spin.

Posted by Len Bullard on October 05, 2006 at 03:31 AM PDT #

Jonathan, bravo for bringing up this topic in the blogosphere--and I'm glad to see concern around it growing among C-level execs. in public technology companies. As Chris Heuer mentioned above, this is an area of concern as the PR community looks to establish some standards for using social media tools to communicate with the media and other publics. It's a very complicated area, as the PR wire service folks we work with remind us. Amy Gahran and I began researching this topic back in January, and at that time found very little recent discussion on the topic--so we launched our own investigations. I hope these postings add some more context to the discussion.

Posted by Todd Van Hoosear on October 05, 2006 at 07:02 AM PDT #


This is great. As a fellow blogger, and a long-time investor relations professional, I concur with you and think this is absolutely the direction we should be going in.

As early as 2002, the SEC hosted a roundtable to discuss the disclosure process. One of the ideas to modernize the process that was floated was the idea of "real time disclosure." See the transcript here:

Lou Thompson, the former CEO and President of the National Investor Relations Institute (who recently retired), talked up real time disclosure for the past year. In his farewell address to the Philadelphia NIRI chapter last May, he said that he expected the quarterly earnings process to be replaced by a methodology for real time disclosure - and soon.

What could be more real time than having the CEO post material news on his blog? And then having that post forwarded to every interested investor, via RSS, immediately!?

Kudos, and please keep us "posted" of any SEC response to your letter. Best of luck, and let me know if I can help in any way,

Joe Crivelli

Posted by Joe Crivelli on October 05, 2006 at 10:14 AM PDT #

Jonathan: Kudos. Let me suggest that you go one step further and encourage nonprofit organizations which SUN supports to seriously look to the adoption of webifiable standards such as the Urban League's universal chart of accounts coupled with "interactive data" as a way to let the pool of donors do apple to apple comparisons of their service delivery efficiencies.

Posted by Ed Dodds on October 05, 2006 at 01:45 PM PDT #

Bravo Jonathan! And Cox is just the guy to get it through.

Posted by mike simonsen on October 05, 2006 at 07:27 PM PDT #

While I think that the idea has some appeal, the issues raised by a few of the other comments have to be dealt with. One additional problem is the implied assumption that someone who is interested in a company's material disclosure should have to subscribe to the random musings of the CEO.

Posted by David Staub on October 05, 2006 at 09:35 PM PDT #

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