EDITORIAL: SEC threatens PR firms' disclosure

The paranoia that has gripped US firms post-Enron extended around the world this week, with the decision by six of the largest marketing services groups not to release financial information about their range of subsidiaries.

There are many grey areas in the Sarbanes Oxley Act - the US corporate law reform that has triggered this development - but what is clear is that the current interpretation will work against the spirit of the Securities and Exchange Commission (SEC) regulation, designed to promote greater, rather than lesser, disclosure.

For the PR industry, this ruling will diminish even further the small pool of reliable information available about this growing sector. It may even affect trade associations, whose membership fees are based on revenue information released by individual brands.

Among the key sources of industry data affected are PRWeek's league tables of consultancies in key international markets. This year's Top 150 ranking of UK consultancies will now be published minus the figures of some of the the UK's leading players.

These league tables provide a crucial barometer of the health of the sector, and benchmarking tool for consultancies, but in reality they are unlikely to unduly influence investors - the main concern of the SEC.

In the US, the Council of PR Firms is now working with the holding companies and outside legal counsel in an attempt to unravel the real implications of this regulation. While in the UK, PRWeek and the PRCA will work with the consultancies and holding companies affected to find a workable solution that meets both their needs and SEC requirements.

While understandable in the current climate, the current clampdown is akin to taking a sledge-hammer to crack a nut.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in