Initial Thoughts on Goldman, Sachs' Q3 Reporting Experiment

We’ve provided some screen captures of Goldman, Sachs quarterly results reporting as it appears on TD Ameritrade this a.m. The same analysis can be performed on other financial portals to judge the success and efficacy of the alternative approach. 

Clearly the financial community was poised for the report and the news flow was seemingly unimpeded by the change in disclosure methodology which eliminated paid wire service dissemination in favor of a website led disclosure supplemented by Twitter communications. 

Note that in order to achieve broad instantaneous disclosure of its financial results outside of its website and Twitter activity, we have been told by reliable sources that Goldman provided its news release in advance to certain financial media, such as (we presume) Dow Jones, Reuters, Bloomberg etc. so that they could prepare the content and report it simultaneously with the web release. 

A few cursory observations on how it went (from TD Ameritrade's news sources - example screen grabs provided below):

• In our observation, Goldman’s release appeared on their website at 7:35am ET – possibly 7:34am ET however, Dow Jones' headlines started reporting the results at 7:33am ET. 
•  From our observations, the Zack’s coverage, while it says 7:06am ET, did not appear prior to the Dow headlines and seems to have been “post dated” in its posting to 
• None of the Goldman headlines on TD Ameritrade provide direct links to the full content of the Goldman release – whereas in the Q2 reporting cycle the full text of the release is accessible by clicking on a series of Dow Jones headlines.
•  The absence of a broad, simultaneous distribution of the entire news release to financial portals such as TD Ameritrade remains our principal critique of the website-driven disclosure.
• Even the advance notification of certain major financial media such as Dow Jones did not achieve the same level of access to the source content (the actual release) as did Goldman's previous paid wire service distribution.
•  Also, anecdotally, the first MarketWatch Clip today was at 7:40am ET vs. 7:37am ET for Q2 reporting.  

Again, while we do appreciate the attempt to innovate, we do hold innovation to a standard of efficacy and relevance and for that reason we've gone out of our way to raise caution about this new approach for Companies considering it. 

The analogy that comes to mind is that if we needed a document to "absolutely, positively" be somewhere the following morning, we would utilize one of the major overnight courier services, rather than to construct our own distribution channel of fast cars and fast drivers to achieve the same goal.  It just does not seem that safety or efficacy were served in this experiment, but we welcome any evidence that in fact this is a far better idea. 

The Catalyst Global Team

Goldman Sachs Q3 Reporting Headlines

as Appeared on TD Ameritrade on October 15, 2015

Goldman Sachs Q2 Reporting Headlines From July 16^th as appear today on TD Ameritrade (Release issued via a Newswire Service at 7:35 a.m. ET)

 

    Looking at other disclosure sources we find the following issues:

    

    Bloomberg.com:

    Goldman's Q3 results are not listed in the Press Release section for Goldman on Bloomberg.com - not a terrible issue given that some coverage of the results appears on the website - but not an ideal result for 1/4ly results. 

     Similarly, on TD Ameritrade when searching on press releases, Goldman's Q3 results are nowhere to be found - again not a desirable outcome. 

    Reuters.com:

    Goldman's Q3 results are discussed in a news item on Reuters but the full text of the results is not available on Reuters news page for Goldman. 

    Zacks.com:

    Here's the news item attributed to Zacks but we don't believe was issued until after the release was posted to the website around 7:34 or 7:35 - it's time stamp of 7:06 am therefore appears to be incorrect.  While not a major issue, it does raise a question as to the accuracy and reliability of data that gets reported and then consumed by investors.  

     

Website Disclosure: What’s Good for the Goldman is Not Necessarily Good for the Gander

While we admire their effort to innovate, Goldman’s decision to not utilize a wire service to disseminate their upcoming earnings but instead to disclose their results via their website and Twitter seems a step backward for full, fair and simultaneous, broad disclosure. 

Goldman’s choice of “pull” vs. “push” in material disclosure seems to go against the spirit of Reg. FD – even if the SEC has condoned the practice.

Companies looking to follow Goldman’s lead should consider the following: 

•       Do investors prefer to go and fetch earnings news off each company’s website - or do they prefer to access all company earnings in real time via their preferred financial portal/data source?
•       Isn’t it easier and better to use a wire service to “push” material earnings data to all relevant sites/services used by investors in real time?
•       How do Goldman’s financials get onto all the major financial portals and databases relied upon by most investors? When is this accomplished? [Read below]
•       What data integrity safeguards exist in getting Goldman earnings content on other investment information portals/services?
•       How do you confirm the time disclosure has been achieved and when you are able to “push” your data out via email, etc?
•       Is your website secure and sufficiently robust and easily navigable to provide immediate access to all investors in real time?
•       Is your web team able to accomplish such disclosure efforts and if so, at what cost relative to the alternative?
•       Are you 100% confidant your site cannot be compromised before, during and after your material disclosures?  Are you comfortable in taking on any liability related to managing this function?

While industry leaders can get away with making a process more time consuming and less investor friendly –  can you? What would the world look like if all companies followed Goldman’s approach and investors had to go to each company’s website to 

get material earnings news? It certainly would be good for driving Edgar traffic!

Does a 140 character Tweet have a real place in disclosing material information when the source material is initially available on just one website?  What about unplanned material news - which is quite different than normally scheduled earnings reports - does the website/Tweet model provide suitable disclosure breadth & speed?

And in the end, what does Goldman really have to gain from this approach, besides wire service cost savings (offset by the cost of in-house efforts) and publicity for it and its corporate finance client Twitter?

While the incidence of high-profile online security breaches continues to grow and no site seems immune, even the wire services, the problem isn’t wire service disclosure – the problem is security.  Our sense is that the wire services are spending a lot more time & money on addressing those risks, than most corporate or IR sites, and their speed and breadth of reach is really not possible to beat. 

The concept of moving the source of your disclosure from a wire service that reaches hundreds of mainstream financial websites simultaneously, to your own website, is hard to understand, particularly when you also consider how this action could relocate the risk and potential liability of any disclosure mishaps directly to your company.  

Publicity aside, it's very hard to understand how this is a good idea for Goldman, its investors or anyone else?

What we learned this afternoon from speaking with industry colleagues is that to address the disclosure limitations of its website, Goldman plans to provide "advance copies" of its news annoucement to several media sources prior to its formal disclosure, though we were not privy to "how long in advance?" or who those media sources are or are not. This effort seems intended to help these media points digest and report the earnings news while at the same time acknowledging the limitations they would face if they had to pull the news from the website along with everyone else.  

While this practice is allowed under the Reg. FD "media carveout," it does seem a counterintuitive security strategy when it spreads disclosure risk across a greater number of points rather than one central location. Fairness, equal access to the news, and sensitivity to investors' needs and the value of their time do not seem as well served with this new model but we'll see how it works over the coming quarters.

David C. Collins         

Managing Director

Catalyst Global LLC

October 8, 2015