At the end of April, Twitter’s shares crashed by 20% after its quarterly earnings were leaked, ironically on Twitter. The earnings details first appeared on the Twitter account of Selerity, a real-time financial intelligence platform that mines financial data from publicly accessible online sources. In this instance, Selerity scraped Twitter’s investor relations site, and came across the earnings data and published the details on Selerity’s Twitter feed before it was announced.
This instance highlights the importance of maintaining enterprise-grade levels of security when sharing sensitive financial data and more importantly, having controlled processes in place to manage when, by who and what information is disclosed.
The growing importance of investor relations
Investor relations continues to become an increasingly important area for all companies. Not only do they ensure that existing investors are consistently updated with reliable information, but the IR (investor relations) role is at the center of every aspect of the business, from marketing to finance, to operations, performance and business development. Regulatory drivers, combined with investor expectations and continued competition for raising new funds has led the role of investor relations to be more demanding and critical to the business.
Trust is a three-way street
Building trust in investor relations is crucial but it’s not just down to the IR role. Building trust is a three-way street and having a clearly defined process and open channel is crucial; there is a need to share information and increasing regulation and investor demands means the volume and type of information sought continues to increase. However, when communicating and demonstrating transparency, there is a need to protect and monitor where proprietary information goes. So what is important to each party?
Investors are increasingly concerned about their information, specifically how you collect their information during the fund raising and on-boarding process and how this information is stored. There are expectations of timeliness of reporting and transparency of investment strategy, performance and decision making. Access to this information should be available 24/7 and communication back and forth should be as secure as the reports themselves; not via email.
Financial firms are concerned about how their proprietary information is shared and about giving away too much confidential information. They want insight into what prospective investors are interested in, together with a secure place to manage the communication of questions and answers centrally. Traditionally fund admins and prime services teams have helped to service much of the IR admin role; the trend however is to control more of the process and to bring this function in-house.
Regulators want to ensure that transparency is upheld so that investors are not kept in the dark with regard to the status and risks of their investments. Systems and processes must be in place to protect investor information from leaking and getting into the wrong hands.
Cybersecurity is a big challenge and the initiative by the SEC highlight the issues around cybersecurity in the financial markets, with firms needing to have steps in place to protect sensitive data. Cybersecurity threats and general concerns over how investor reports are distributed (along with additional workload fears), often mean this process is delayed and the information is out of date.
Company information you share with investors is extremely confidential and you don’t want it getting into the wrong hands; there is therefore, a definite need for secure ways to share such information. An investor reporting portal provides a secure place to control what is shared, with who and when. With the need to stay transparent to investors but also ensure your reports are protected, a secure investor portal allows you to invite investors to view documents and reports in a branded and permissionable reporting platform.
Why can’t I use email? Controlling information
You’ve been using email for years and you know how it works, it’s your go-to platform when it comes to sharing documents and it’s safe, right? Wrong. Many files you will want to share with investors are far too sensitive to trust email as email cannot control where the information it contains is forwarded to, meaning your private company information could end up anywhere.
Investors demand a high level of transparency during capital raising and the due diligence process, together with ongoing investment reporting. You need to know that sensitive information you share with the investor community is kept confidential; replacing email communication with an investor reporting portal will allow this secure transparency.
A credible provider of secure document and collaboration solutions can empower you with the tools and security to ensure your investors are getting the right information. With a fully permissionable platform, you can pick who sees what and when; you may want one potential investor to see a file that perhaps wouldn’t be relevant for another, so you can set user permissions and apply security at the project, folder or document level. Investors only see the information they are granted access to.
A secure portal also allows you to monitor what your investors are looking at, their activity and what they’re interested in, whilst protecting what they can do with that information. This gives you insight during the investment lifecycle from capital raising to due diligence and on-going investor reporting. You are able to lock the information down and choose how it is viewed using robust digital rights management capabilities.
Communication is more than just reporting
A portal makes the investor reporting process more secure, efficient, quicker, and it allows you to be transparent with your investors. It provides you with a secure area to put everything into one place, so you are easily able to create reports and then share them with investors. Built-in approval steps ensure the accuracy of centrally stored fund data which can be inserted instantly into a fully branded report using a document automation tool, which reduces operational risks and ensures that sensitive information is only shared with those entitled to it. But investor relations is more than just creating reports.
Not only is the communication of reports important to secure but by the very nature of being transparent, it is imperative to provide a secure area to correspond. Investors will have questions but won’t want to continuously pick up the phone to get answers. For a financial firm, having a central process in place to collect and have the relevant subject matter expert answer these questions is an important tool for transparency and also allows the tracking and control of the Q&A process; this will also help during the audit or regulatory review process.
Change is essential
It’s clear that investor relations continues to become more involved in every aspect of a business and the risks are significant if you get things wrong. Trust is important and a willingness from all parties to ensure a transparent, efficient and secure environment are greatly encouraged. With further regulation looming, the only constant is change.
If you’d like to find out more about HighQ’s investor relations solutions, contact us for a demo today.
