SEC Approves Guidelines For Public Cos' Web Site Content
WASHINGTON (Dow Jones)--The Securities and Exchange Commission voted 5-0 Tuesday to approve new guidelines for public companies' Internet use and
suggested it will revisit the topic later this year.
"This action is part of our broader effort to address the many issues
elicited by the rise of the Internet," SEC Chairman Arthur Levitt said at a
public meeting to consider the release. He predicted the new Internet
guidelines will remove some obstacles to online communication without
jeopardizing investor safeguards.
Web site content, electronic document delivery and online offerings are
covered by the guidelines. In an unusual twist, the release concludes with a
flurry of Internet-related questions, touching everything from online chat
rooms to responsibility for outdated Web links.
The SEC hasn't issued guidance on corporate Internet usage since 1996, so its
latest thinking in this area should be helpful, said David Martin, director of
the SEC's corporation finance division, which took the lead in developing the
release.
Specifically, the release clarifies questions about what companies may put on
their Web sites, including hypertext links - a link to another Web site. Many
companies have hesitated to include such links on their own Web sites or online
prospectuses for fear that they may be liable for the content of third-party
Web sites.
"We eliminate this confusion," said Michael McAlevey, deputy director of the
SEC's corporation finance division. The guidelines spell out that hyperlinks
become part of a prospectus only if they are included in it, for instance,
through a link embedded in the document.
As for corporate Web sites, the SEC didn't issue hard-and-fast rules on how
to safely use hypertext links, but said a company may avoid liability for
content on third-party sites, depending on the particular facts and
circumstances of the links. Three key factors - the context of the link, the
risk of investor confusion, and the presentation of the hyperlinked information
- will be considered in evaluating liability, the SEC said.
"I think it will stimulate use of hyperlinks," which should help investors
access more information about a company or an offering, McAlevey predicted.
SEC enforcement officials said they won't hesitate to crack down on companies
that knowingly link their site to a fraudulent, third-party site and said the
new guidelines wouldn't crimp their efforts to police the Internet. |
