Disclosure Advisory Board Advocates Full Disclosure of All Public Company Shareholders

Disclosure Advisory Board Advocates Full Disclosure of All Public Company Shareholders

June 05, 2007

Second white paper from esteemed group calls for
transparency of shareholder identity to make disclosure a
two-way street


    NEW YORK, June 5 /Xinhua-PRNewswire/ -- The Disclosure
Advisory Board -- a 15-person council of leaders in the
corporate, regulatory, investor, reporting and academic
communities organized by PR Newswire -- announced today
recommendations for shareholder disclosure, voicing its
concern that the concealment of shareholder identity is
creating a disorderly market in the U.S.

    ( Photo: 
http://www.newscom.com/cgi-bin/prnh/20070604/NYM101 )

    ( Logo: 
http://www.newscom.com/cgi-bin/prnh/20000306/PRNLOGO )

    In a newly published white paper, "Shareholder ID:
 The Resounding Silence of Non-Disclosure," the Board
calls for investors to follow emerging global best
practice, and reveal their identities, and for regulators
to re-examine existing shareholder disclosure rules,
outdated by new derivative investments.  Further, the Board
contends that lack of shareholder identity disclosure is
negatively affecting the U.S. capital markets by allowing
destructive behaviors to go unchecked, putting the U.S. at
a competitive disadvantage on the world stage.  

    The white paper, the second in a series from the
Disclosure Advisory Board, was published in conjunction
with the largest gathering of investor relations
professionals at the National Investor Relations
Institute's (NIRI) annual conference in Orlando, FL, June
3-6.

    "Vibrant equity markets depend on the active
participation of investors.  However, certain practices in
the U.S. send mixed signals and put many investors at a
disadvantage," said Mark Hynes, chairman and
spokesperson of the Disclosure Advisory Board, and managing
director of Global Investor Relations Services for PR
Newswire.  "Non-disclosure on the part of investors is
not just an issue for public companies. It creates a
disorderly market for all parties involved.

    "Yet it is the company that bears most of the
risk.  Lack of investor information exposes shares to
potential price manipulation from unknown holders with
unknown intentions, increasing a company's vulnerability to
takeovers and proxy fights.  This cloak of investor secrecy
also makes companies susceptible to the agenda of hedge
funds and other short-term holders who may provoke actions
not favorable to longer-term business objectives.  

    "Consequently, we believe it's time for
undisclosed U.S. investors to break their resounding
silence. We're calling for shareholder identity
transparency to make disclosure a two-way street.  In an
era of 'right to know' advocacy, U.S. public companies
should have the right to know who their shareholders
are."

    In reaching its opinion on shareholder disclosure, the
Disclosure Advisory Board noted the following concerns
which it believes must be resolved in order to bring a
level playing field back to the U.S. capital markets:

    -- Lack of shareholder knowledge -- as well as legal or
regulatory 
       recourse -- places companies at considerable risk. 


    -- Market practices inhibit disclosure professionals
from communicating 
       directly with certain investors.  As shareholders
cry out for majority 
       voting or for a "say on pay," the embargo
on direct communications with 
       investors is disadvantaging companies and corporate
boards of directors, 
       and even shareholders themselves.  

    -- Lack of investor identity and direct investor
communications contribute 
       to practices such as empty voting which, in addition
to affecting the 
       outcome of directors' elections, may also bestow
unfair advantages on 
       some investors who may even hold negative positions.
 

    -- The growing practice of "borrowing" shares
enables undisclosed investors 
       without economic interest or with limited stakes to
have an outsized say 
       in elections that affect issuers and other
investors.  Once the 
       borrowers cast votes to achieve their objectives and
return the shares, 
       they leave the other investors and public companies
to contend with the 
       aftershocks.

    -- Companies have been under increasing pressure to
disclose information 
       simultaneously since Regulation Fair Disclosure in
2002, yet are doing 
       so to an audience that may only be partially known
to them. This makes 
       effective and targeted communications difficult.

    -- Glaring paradoxes exist between capital markets in
the U.S. and those 
       abroad.  For example, foreign issuers can find out
more about their U.S. 
       investors than U.S. issuers can find out about U.S.
investors.  Left 
       unsettled, these paradoxes could thrust U.S. capital
markets out of 
       competition.

    -- Newer financial products and practices, such as the
growing popularity 
       of cash-based derivatives, enable investors to
aggregate shares without 
       disclosure obligations to issuers or other market
participants. The 
       prevalence and magnitude of this activity has had a
resounding impact on 
       the markets.

    William A. Relyea, managing director, H.C. Wainwright
& Co., Inc. and a member of the Disclosure Advisory
Board, commented, "The end result of this undisclosed
shareholder syndrome is it allows investors with
significant capital backing a certain anonymity that
enables them to make market-roiling moves, particularly in
individual stocks. This often has an adverse impact on the
company, its stockholders, as well as the employees and
others who depend on the services the business
provides."

    Hynes concluded, "The U.S. shareholder identity
problem calls for immediate action. Shareholder
non-disclosure is creating a disorderly market in the U.S.,
making it less attractive than investment venues in other
parts of the world.  

    "It is time for undisclosed shareholders to break
their silence and announce who they are. Collective silence
on this matter is no longer an option."

    The complete white paper, the second published by the
Disclosure Advisory Board, is available at
http://disclosureadvisoryboard.mediaroom.com/ .  To read
Mark Hynes' blog, Transparency Matters, go to
http://transparencymatters.blogspot.com/ .

    About the Disclosure Advisory Board

    The Disclosure Advisory Board was brought together by
PR Newswire in June 2006 to assess and comment upon the
state of corporate disclosure and transparency. Comprised
of 15 individuals with a combined 450 years of regulatory
and compliance experience, the aim of the Board is to
debate current disclosure and governance issues, and based
on the discussions, propose "best practices" for
improved financial and corporate reporting. The Disclosure
Advisory Board believes that communication -- disclosure
and transparency -- lies at the heart of winning back
public consent.

    Members of the panel are: John Bierbusse, corporate
director and retired equity research analyst at A G
Edwards; Janet L. Fisher, partner, Cleary Gottlieb Steen
& Hamilton LLP; Valerie Haertel, VP/director of
investor relations, Medco Health Solutions, Inc.; Jerry
Hostetter, VP/director of public relations and investor
relations, Smithfield Foods Inc.; Deborah Kelly, partner,
Genesis Inc.; Mark Hynes, managing director of Global
Investor Relations Services for PR Newswire; Jack L. Kelly,
co-head, industrial research team, Goldman Sachs; Mary Beth
Kissane, president and founder, Corporate Perception
Research; Sam Levenson, SVP Investor Relations, Sony
Corporation of America; William A. Relyea, managing
director, H.C. Wainwright & Co., Inc.; Diane Salucci,
SVP, Bear Wagner Specialists LLC; Martin Shea, EVP,
investor relations, CBS Corporation; Kurt Stocker, member
of the board of directors of NYSE Regulation, Inc. and
chairman of the New York Stock Exchange Individual
Investors Advisory Committee; Anna Sussman, director,
Investor Relations and Corporate Communications, Pharmion
Corporation; Louis M. Thompson, Jr., partner, Genesis Inc.,
and managing director, Kalorama Partners, and former CEO,
president and board member of the National Investor
Relations Institute.

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    For more information, please contact: 

     Rachel Meranus
     Vice President
     Public Relations
     PR Newswire 
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           http://disclosureadvisoryboard.mediaroom.com 
           http://transparencymatters.blogspot.com