What were they thinking: Favoring Wall Street

12/7/2012 1:40 PM EST

Back in 2000, the SEC passed regulation that would prevent the favored clients of the big banks from getting news and information ahead of the average investor. This was meant to put the small market players on equal footing with the big guys. This also meant that companies had to be very careful about how they disseminated information and in many cases had the inevitable consequence of companies providing less information than they ever had in the past. This make investment decisions for everyone harder. In general, the only way that a company could disseminate information was through an SEC filing or a press release. The problem is - who looks at those things? I rarely look at SEC filings and while I do look at many hundreds of press releases, I most certainly do not report them all to you (I spare you the agony of a majority of them having little to no real information). So you don’t see most of them.

So what is fair reporting? Well, The CEO of Netflix – Reed Hastings – is finding out that providing information directly to more than 200,000 people through Facebook does not pass the SECs fair disclosure btest, even though I am sure that is more than would have ever read a press release providing the same information. This is another example of new media confusing old media people and those who still think that old media is a pretty neat idea. (Yes, I know you are reading this in a new media form within an old media publication, but then they did just stop doing print editions.)