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Cover Story Registrations Forms 8-K Williams Act SEC News Digest

Commenters Express Concern About "Republished" Data on Web Sites

      The comment period closed yesterday on the SEC's inquiry about the need for additional regulatory action governing the use of electronic media (Rel. No. 34-42728). The greatest concern expressed by Kutak Rock LLP, Florida's Division of Bond Finance and the Nat'l. Ass'n. of Bond Lawyers was the SEC's position on access to historical information. Fidelity Investments also urged more flexibility with respect to historical documents posted on a Web site, but suggested a half dozen additional areas that need clarification or "a fresh look."

      The problem the commenters see with the Commission's position on access to historical information is the statement in the release that a posting on a Web site may be considered "republished" each time it is accessed by an investor. Kutak Rock sees no reason why a dated release on a Web site should not be treated the same as a written release. The position taken in the SEC's release can be expected to restrict the scope of information that gets posted, in the firm's view.

      Kutak Rock said a number of its clients are concerned enough to have discussed removing financial or operating information from their Web sites. The firm said it was "dismayed" that the SEC would endorse a position that creates an impossible updating standard that will result in less timely and complete disclosure.

      Florida's Division of Bond Finance was equally troubled by the concept of "republishing" information on a Web site each time it is accessed by an investor. The division said this interpretation presents serious problems for governmental issuers that use Web sites to provide information to the market because of its potential for significantly increasing their disclosure obligations. Florida would probably discontinue its Web-based disclosure platform because of the increase in exposure to liability and the administrative burden this interpretation imposes, according to the division.

      The Nat'l. Ass'n. of Bond Lawyers' board of directors agreed that information posted on an issuer's Web site should be treated the same as the same information in paper format. Outside an offering period and absent a duty to correct or update, an issuer does not have an obligation to update an earlier disclosure merely because an investor accesses an earlier disclosure, NABL stated. The association urged the SEC not to impose a new and unique continuing duty to update information simply because it appears on an issuer's Web site.

      NABL suggested the use of an archival section of the Web site which requires a user to click on a button that states that the information has not been updated since a given date. Information that is not archived could include a message that the information is provided as of a given date and has not been updated.

      Fidelity also encouraged the SEC to adopt a practical standard for the use of historical information. As long as the information is clearly dated and identified, it should not be treated as "republished" each time it is accessed through a Web site, according to Fidelity.

      Fidelity was much more concerned with the failure to provide clear standards for the use of hyperlinks, which it termed one of the most innovative aspects of electronic media. The SEC does not recognize or cite the NASD's reasonable and objective approach, Fidelity notes, but instead creates yet another standard for analyzing hyperlinks in marketing material. Fidelity asked the SEC to take a fresh look at this area with an eye toward creating certainty in regulatory pronouncements. The SEC should work closely with the NASD in developing this framework, Fidelity added.

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