Ignorance Is No Excuse For Communication & Disclosure Slip Ups!
I often write in this blog about the importance of knowing the nuances of corporate governance and disclosure requirements pertaining to IR, and by extension, PR. This has become even more important with the increasing number of regulatory requirements companies are forced to adhere to, ranging from Reg. FD to Sarbanes-Oxley to Dodd-Frank to each Exchange’s own listing requirements. Adding to this complexity is the incorporation of IR into broader communications programs, exposing those who are not familiar with regulatory requirements to a new environment, and vice versa.
This is a good thing, until it is not.
If you do not know these rules, not only will you be ineffective, but it can have a litany of disastrous consequences for your client, including a delayed or canceled IPO. I am not saying we all do not make mistakes -- even smart people make an occasional misstep. However, the care and sensitivity required around transactions (especially when dealing with Hart-Scott-Rodino), and in particular IPOs, is of the utmost importance.
Yet, we continue to see the same disclosure issues arise every quarter, with every type of transaction. It is irrelevant if the cause of a disclosure error is due to pressure from a client, or internal pressure to up-sell a client on a range of communications services an agency is not equipped to handle. What is relevant is a detailed understanding of what serves as the key tenets of our discipline: knowing disclosure requirements inside and out.
I offer three simple takeaways:
- If you do not know the disclosure requirements, learn them.
- If a client asks if you are well-versed in disclosure requirements before retaining your services, be honest about your limitations.
- If a client asks you to blatantly ignore the rules, reexamine if this is a relationship worth having, or will it eventually do more harm to your agency than it is worth.
In a highly regulated industry, ignorance is no excuse. The penalties to the agency and the client can be very costly.