[Federal Register Volume 73, Number 153 (Thursday, August 7, 2008)]
[Rules and Regulations]
[Pages 45862-45874]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-18148]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 241 and 271

[Release Nos. 34-58288, IC-28351; File No. S7-23-08]


Commission Guidance on the Use of Company Web Sites

AGENCY: Securities and Exchange Commission.

ACTION: Interpretation; solicitation of comment.

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SUMMARY: We are publishing this interpretive release to provide 
guidance regarding the use of company Web sites under the Exchange Act 
and the antifraud provisions of the federal securities laws. We are 
soliciting comment on issues relating to company use of technology 
generally in providing information to investors.

DATES: Effective Date: August 7, 2008. Comment Date: Comments should be 
received on or before November 5, 2008.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/interp.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number S7-23-08 on the subject line; or
     Use the Federal eRulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
    All submissions should refer to File Number S7-23-08. This file 
number should be included on the subject line if e-mail is used. To 
help us process and review your comments more efficiently, please use 
only one method. The Commission will post all comments on the 
Commission's Web site (http://www.sec.gov/rules/interp.shtml). Comments 
are also available for public inspection and copying in the 
Commission's Public Reference Room, 100 F Street, NE., Washington, DC 
20549 on official business days between the hours of 10 a.m. and 3 p.m. 
All comments received will be posted without change; we do not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Jeffrey Cohan, Kim McManus or Mark 
Vilardo, Special Counsels in the Office of Chief Counsel, Division of 
Corporation Finance, at (202) 551-3500, 100 F Street, NE., Washington, 
DC 20549.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction and Overview
    A. Introduction
    B. Overview of Exchange Act Rules on the Use of Company Web 
sites
II. Application of Certain Provisions of the Federal Securities Laws 
to Information Presented on Company Web sites
    A. Evaluation of ``Public'' Nature of Information on Company Web 
sites
    1. Whether and When Information Is ``Public'' for Purposes of 
the Applicability of Regulation FD
    2. Satisfaction of Public Disclosure Requirements of Regulation 
FD
    B. Antifraud and Other Exchange Act Provisions
    1. Effect of Accessing Previously Posted Materials or Statements 
on Company Web sites
    2. Hyperlinks to Third-Party Information
    3. Summary Information
    4. Interactive Web site Features
    C. Disclosure Controls and Procedures
    D. Format of Information and Readability
III. Request for Comment

I. Introduction and Overview

A. Introduction

    In its February 2008 Progress Report, the Federal Advisory 
Committee on Improvements to Financial Reporting recommended that we 
provide more guidance as to how companies can use their Web sites to 
provide information to investors in compliance with the federal 
securities laws, particularly with respect to the Securities Exchange 
Act of 1934 (the ``Exchange Act'').\1\ Prompted, in part, by this 
report, we believe that to encourage the continued development of 
company Web sites as a significant vehicle for the dissemination to 
investors of important company information, it is an appropriate time 
to provide additional Commission guidance specifically addressing 
company Web sites.\2\ While we addressed certain discrete Internet 
issues relating to the Securities Act of

[[Page 45863]]

1933 (the ``Securities Act'') in 2005,\3\ we last provided guidance in 
2000 on the electronic delivery of disclosure documents, company 
liability for Web site content, as well as other matters.\4\ We noted 
then that, given the speed at which technological advances are 
developing, and the translation of those technologies into investor 
tools, we expected to revisit the guidance provided at that time in 
order to update and supplement it as appropriate.\5\
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    \1\ See Progress Report of the SEC Advisory Committee on 
Improvements to Financial Reporting, Release No. 33-8896 (Feb. 14, 
2008) (``CIFiR Progress Report''), available at http://www.sec.gov/rules/other/2008/33-8896.pdf.
    \2\ In this release the term ``company Web site'' and the use of 
the term ``Web site'' in the context of companies refer to public 
(Internet) company sites, as distinguished from private (intranet) 
sites. A company Web site is maintained by or for the company and 
contains information about the company.
    \3\ See Securities Offering Reform, Release No. 33-8591 (Aug. 3, 
2005) [70 FR 44721] (``Securities Offering Reform Release'').
    \4\ See Use of Electronic Media, Release No. 33-7856 (Apr. 28, 
2000) [65 FR 25843] (``2000 Electronics Release'').
    \5\ See id. at Section II.D.
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    Given the development and proliferation of company Web sites since 
2000, and our expectation that continued technological advances will 
further enhance the quality, not just the quantity, of information 
delivered and available to investors on such Web sites, as well as the 
speed at which such information reaches the market, we are issuing this 
interpretive release \6\ to provide additional guidance on the use of 
company Web sites with respect to the antifraud provisions and certain 
relevant Exchange Act provisions of the federal securities laws.\7\ Our 
guidance focuses principally on: \8\
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    \6\ We do not view the guidance in this release as a delineation 
of the outer limits of how technology can or should be used on 
company Web sites.
    \7\ In addition to the Exchange Act, companies must also 
consider whether their Web sites may involve issues under the 
Securities Act, which we discussed in our 2000 Electronics Release. 
For example, a company in registration must consider the application 
of Section 5 of the Securities Act to all of its communications with 
the public--including information on a company's Web site. See 2000 
Electronics Release, supra note 4. This consideration is important 
with regard to any company engaged in offering and selling its 
securities, including companies engaged in continuous offerings of 
their securities, such as mutual funds. Because our rules adopted as 
part of Securities Offering Reform in 2005 answered many of the key 
issues relating to company Web site use under the Securities Act, 
this release will focus on the antifraud provisions and certain 
Exchange Act provisions only. See Securities Offering Reform 
Release, supra note 3; Securities Act Rule 433 [17 CFR 230.433].
    \8\ For purposes of this release generally, we are using the 
term ``company'' to refer to entities that are corporations, 
partnerships and other types of registrants subject to the periodic 
reporting and antifraud provisions of the Exchange Act, including 
registered investment companies.
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     When information posted on a company Web site is 
``public'' for purposes of the applicability of Regulation FD;
     Company liability for information on company Web sites--
including previously posted information, hyperlinks to third-party 
information, summary information and the content of interactive Web 
sites;
     The types of controls and procedures advisable with 
respect to such information; and
     The format of information presented on a company Web site, 
with the focus on readability, not printability.
    We have long recognized the vital role of the Internet and 
electronic communications in modernizing the disclosure system under 
the federal securities laws and in promoting transparency, liquidity 
and efficiency in our trading markets.\9\ Central to the effective 
operation of our trading markets is the ongoing dissemination of 
information by companies about themselves and their securities. A 
reporting company's reports that it files under the Exchange Act and 
other publicly available information form the basis for the market's 
evaluation of the company and the pricing of its securities, and 
investors in the secondary market use that information in making their 
investment decisions.
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    \9\ See, e.g., The Impact of Recent Technological Advances on 
the Securities Markets (Sept. 1997) (available at http://www.sec.gov/news/studies/techrp97.htm). In this report, we stated 
that we were mindful of the benefits of increasing use of new 
technologies for investors and the markets, and have encouraged 
experimentation and innovation by adopting flexible interpretations 
of the federal securities laws. We noted that our approach has 
balanced the goals of promoting the benefits of electronic media, 
with the need to protect investors and the integrity of the markets 
from fraud and abuse. We also emphasized the importance of continued 
coordination with market participants and federal, state and 
international regulators as technological advances develop. See also 
Securities Offering Reform Release, supra note 3.
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    Ongoing technological advances in electronic communications have 
increased both the markets' and investors' demand for more timely 
company disclosure and the ability of companies to capture, process and 
disseminate this information to market participants. Indeed, one of the 
key benefits of the Internet is that companies can make information 
available to investors quickly and in a cost-effective manner. 
Recently, we noted that approximately 80% of investors in mutual funds 
in the United States have access to the Internet in their homes.\10\ 
Investors are turning increasingly to electronic media and to company 
and third-party Web sites as sources of information to aid in their 
investment decisions, particularly since many types of investment-
related company information are available only in electronic form. We 
believe that the Internet has helped to transform the trading markets 
by enabling many retail investors to have ready access to company 
information.\11\
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    \10\ See Internet Availability of Proxy Materials, Release No. 
34-55146, at Section I (Jan. 22, 2007) [72 FR 4147] (``Internet 
Proxy Release''). The Investment Company Institute reported that, in 
2006, 92% of mutual fund shareholders had Internet access. See 
Sandra West & Victoria Leonard-Chambers, Ownership of Mutual Funds 
and Use of the Internet, 2006, Investment Company Institute Research 
Fundamentals (Oct. 2006), available at http://ici.org/stats/res/fm-v15n6.pdf. In 2005, that figure was at 88%. Additionally, the 
Investment Company Institute reported that 79% of all U.S. adults 
had Internet access in 2005. See Sandra West & Victoria Leonard-
Chambers, Mutual Fund Shareholders' Use of the Internet, 2005, 
Investment Company Institute Research Fundamentals (Feb. 2006), 
available at http://www.ici.org/pdf/fm-v15n2.pdf. According to the 
Pew Internet & American Life Project, as of an October-December 2007 
survey, 75% of adults use the Internet. See http://www.pewinternet.org/trends/User_Demo_2.15.08.htm.
    \11\ See, e.g., Acceleration of Periodic Report Filing Dates and 
Disclosure Concerning Web site Access to Reports, Release No. 33-
8128, at Section II.D.1 (Sept. 5, 2002) [67 FR 58480] (``Accelerated 
Periodic Report Filing Release'') (``Online access to Internet 
information also helps to democratize the capital markets by 
enabling many small investors to access corporate information.'').
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    Through the years, we have taken a number of steps to encourage the 
dissemination of information electronically via the Internet, as we 
believe that widespread access to company information is a key 
component of our integrated disclosure scheme, the efficient 
functioning of the markets, and investor protection. Today, all 
companies must make their Commission filings electronically through our 
Electronic Data Gathering, Analysis and Retrieval (``EDGAR'') 
system,\12\ and we provide free access to EDGAR on a real-time basis 
through our Internet Web site, www.sec.gov.\13\ In addition to our 
ongoing efforts to improve and modernize EDGAR, we have encouraged, and 
recently proposed requiring,\14\ companies to provide

[[Page 45864]]

financial information on EDGAR in interactive data files, which would 
make financial information easier for investors to analyze, as well as 
help automate regulatory filings and business information processing. 
We also proposed rule amendments requiring mutual funds to provide 
certain key information from their prospectuses in interactive data 
format.\15\ Interactive data has the potential to increase the speed, 
accuracy and usability of financial and other disclosure, and 
eventually to reduce costs.\16\
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    \12\ A limited number of forms continue to be permitted to be 
filed in paper. For example, we permit paper filing of Form 1-A [17 
CFR 239.90] and Form 144 [17 CFR 239.144]. In addition, SEC 
registered investment advisers make some of their filings 
electronically through the Investment Adviser Registration 
Depository.
    \13\ Since 1983, when the Commission first began to develop an 
electronic disclosure system, we have been continually improving and 
modernizing electronic access to companies' Commission filings, as 
well as requiring more forms to be filed electronically rather than 
in paper. The pilot program for EDGAR was established in the early 
1980s pursuant to a Congressional mandate and the system was fully 
implemented, effective January 30, 1995. For a summary of the 
development of EDGAR, see the staff's report, ``Electronic Filing 
and the EDGAR System: A Regulatory Overview,'' (Oct. 3, 2006), 
available at http://www.sec.gov/info/edgar/regoverview.htm.
    \14\ On May 30, 2008, we published proposed rule amendments 
requiring companies to provide their financial statements, including 
financial statement footnotes and schedules, in interactive data 
format on EDGAR. The proposed rules would require a company to 
provide such interactive data in its annual and quarterly reports, 
transition reports, and Securities Act registration statements. 
Companies that maintain Web sites also would be required to post 
this new interactive data on their Web sites. See Interactive Data 
to Improve Financial Reporting, Release No. 33-8924 (May 30, 2008) 
[73 FR 32794] (``Interactive Data Proposing Release'').
    \15\ See Interactive Data For Mutual Fund Risk/Return Summary, 
Release No. 33-8929 (June 10, 2008) [73 FR 35442] (``Mutual Fund 
Interactive Data Proposing Release,'' together with the Interactive 
Data Proposing Release supra note 14, the ``Interactive Data 
Proposing Releases'').
    \16\ Companies create interactive data files by defining--or 
``tagging''--their financial statements using elements and labels 
from a standard list of interactive data tags. Data tagging provides 
a format for enhancing financial and other reporting data using 
electronic formats such as eXtensible Mark-Up Language (XML) and its 
derivatives, such as eXtensive Business Reporting Language (XBRL). 
General information concerning interactive data is available on our 
Web site at http://www.sec.gov/spotlight/xbrl.shtml. See also XBRL 
Voluntary Financial Reporting Program on the EDGAR System, Release 
No. 33-8529 (Feb. 3, 2005) [70 FR 6556]; and Extension of 
Interactive Data Voluntary Reporting Program on the EDGAR System to 
Include Mutual Fund Risk/Return Summary Information, Release No. 33-
8823 (July 11, 2007) [72 FR 39290].
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    As we have developed EDGAR to facilitate and promote electronic 
availability of information, we also have encouraged companies to make 
their Commission filings and other company information available on 
their Web sites. We believe that company disclosure should be more 
readily available to investors in a variety of locations and formats to 
facilitate investor access to that information. Although our rules do 
not require reporting companies to establish or maintain Web sites, our 
rules do promote and, in some cases require, companies to use Web sites 
to make required disclosures.\17\
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    \17\ See Section I.B, infra. See also Exchange Act Section 
16(a)(4)(C) [15 U.S.C. 78(p)(a)(4)(C)]. This section was enacted 
pursuant to the Sarbanes-Oxley Act of 2002 [Pub. L. No. 107-204, 116 
Stat. 745 (2002)] and requires that companies post Section 16 
reports on their Web site if they maintain one. Section 16(a)(4)(C) 
evidences Congress's recognition of the informational utility of 
company Web sites. While our rules do not require companies to 
establish Web sites, the New York Stock Exchange does require its 
listed companies, with certain exceptions, to establish and maintain 
their own Web sites. See NYSE Listed Company Manual, Section 
303A.14.
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    A company's Web site is an obvious place for investors to find 
information about the company,\18\ and a substantial majority of large 
public companies already provide access to their Commission filings 
through their Web sites.\19\ Technological advances, and the reduced 
costs associated with the implementation of technologies over time, now 
allow companies to include more ``interactive'' and current information 
on their Web sites than was the case previously, thereby moving Web 
sites away from the filing cabinet or ``static'' paradigm to a 
``dynamic'' paradigm, one shaped by the market's desire for more 
current, searchable and interactive information.\20\ We recognize that 
allowing companies to present data in formats different from those 
dictated by our forms or more technologically advanced than EDGAR may 
be beneficial to investors.\21\ Indeed, because we recognize the 
enormous potential for the Internet to promote the goals of the federal 
securities laws,\22\ we wish to continue to encourage companies to 
develop their Web sites in compliance with the federal securities laws 
so that they can serve as effective information and analytical tools 
for investors.\23\ Enhanced company Web site presentation of 
information can benefit investors of all types by enabling them to 
gather information about a company at a level of detail they believe is 
satisfactory for their purposes.\24\
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    \18\ Since their first appearance on the World Wide Web, company 
Web sites typically have included copies of Commission filings or a 
hyperlink to the Commission's EDGAR database, along with certain 
other previously posted historical information, such as earnings 
releases. Some companies also have provided limited ``real-time'' 
information, such as stock data links. For a discussion of the 
content of company Web sites in 1998 and prior years, see generally 
Robert Prentice et al., Corporate Web site Disclosure and Rule 10b-
5: An Empirical Evaluation, 36 Am. Bus. L.J.531 (``Prentice''); 
Howard M. Friedman, Securities Regulation in Cyberspace Sec.  10.01 
(3rd ed. Supp. 2006) (``Friedman'').
    \19\ A 2002 study by our Office of Economic Analysis revealed 
that approximately 83% of companies with a public float of at least 
$75 million (other than registered investment companies) provide 
some form of access to their Commission filings through their Web 
sites, either via a hyperlink with a third-party service providing 
real-time access to the filings (45%), by posting the filings 
directly on their Web sites (29%) or via a hyperlink to our EDGAR 
database (15%). See Accelerated Periodic Report Filing Release, 
supra note 11.
    \20\ For example, web pages created in a ``dynamic'' format, 
such as ``active server page,'' are database driven, permitting 
automatic updating of the content. This differs from the 
traditional, ``static'' HTML pages that can only be altered by the 
webmaster. ``Push'' technology, such as e-mail alerts or ``RSS'' 
feeds, enables the automatic, electronic dissemination of new 
information on the site to subscribers. ``Interactive'' investor-
related tools and functionality, such as ``blogs'' and electronic 
shareholder forums, promote direct communications with companies, 
their officers and other representatives.
    \21\ As we noted in a recent release, Shareholder Choice 
Regarding Proxy Materials, Release No. 34-56135, at Section VI.C.1 
(Jul. 26, 2007) [72 FR 42221] (``Shareholder Choice Release''): 
``Information in electronic documents is often more easily 
searchable than information in paper documents. Shareholders will be 
better able to go directly to any section of the document that they 
are particularly interested in. The amendments also will permit 
shareholders to more easily evaluate data and transfer data using 
analytical tools such as spreadsheet programs. Such tools enable 
users to compare relevant data about several companies more 
easily.''
    \22\ See, e.g., SEC v. Capital Gains Research Bureau, Inc., 375 
U.S. 180, 186 (1963) (explaining that the purpose common to the 
securities laws was to ``substitute a philosophy of full disclosure 
for the philosophy of caveat emptor'').
    \23\ While EDGAR and the Commission's Web site continue to serve 
as the core source of companies' securities-related information 
online, we recognize that the technological capacities of company 
Web sites may allow for presentation and manipulation of large 
quantities of data in ways that exceed EDGAR's current capacities. 
For example, while the recently introduced RSS feed on the 
Commission's Web site allows access to documents in interactive data 
format in the pilot program, some commercial and company Web sites 
enable users to receive the filings of companies of their choice.
    \24\ In discussing the use of company Web sites to provide 
information in a tiered format, the Federal Advisory Committee on 
Improvements to Financial Reporting recently observed in its 
February 2008 Progress Report: ``A valuable element of many of such 
[company] Web site presentations is that they present the most 
important general information about a company on the opening page, 
with embedded links that enable the reader to drill down to more 
detail by clicking on the links. In this way, viewers can follow a 
path into, and thereby obtain increasingly greater details about, 
the financial statements, a company's strategy and products, its 
management and corporate governance, and its many other areas in 
which investors and others may have an interest.'' See CIFiR 
Progress Report, supra note 1.
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B. Overview of Exchange Act Rules on the Use of Company Web Sites

    We have issued a series of interpretive releases and rules that 
promote the use of company Web sites as a means for companies to 
communicate and provide information to investors under the Securities 
Act and the Exchange Act.\25\ A fundamental principle underlying these 
interpretations and rules is that, where access is freely available to 
all, use of electronic media is at least equal to other methods of 
delivering information or making it available to investors and the 
market. Further, we have recognized that, in some cases, allowing 
companies to provide information on their Web sites has advantages for 
investors over mandating that EDGAR serve as the exclusive venue and 
format for company

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disclosures.\26\ Indeed, today we have reached a point where the 
availability of information in electronic form--whether on EDGAR or a 
company Web site--is the superior method of providing company 
information to most investors, as compared to other methods.
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    \25\ See generally 2000 Electronics Release, supra note 4; Use 
of Electronic Media for Delivery Purposes, Release No. 33-7233 (Oct. 
6, 1995) [60 FR 53458] (``1995 Electronics Release''); Use of 
Electronic Media by Broker-Dealers, Release No. 33-7288 (May 9, 
1996) [61 FR 24643] (``1996 Electronics Release'').
    \26\ See, e.g., Regulation G [17 CFR 244.100]; Instruction 2 to 
Item 407(b)(2) of Regulation S-K [17 CFR 229.407(b)(2)]; Exchange 
Act Rule 12d-2(c)(2)(iii) [17 CFR 240.12d-2(c)(2)(ii)]. See 
generally Accelerated Periodic Report Filing Release, supra note 11, 
at Section IV.B.1.
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    Our rules and interpretations that promote the use of Web sites 
generally work in two different respects. First, when delivery of 
documents is required under the federal securities laws, we have 
encouraged the delivery in electronic format or recognized that 
electronic access can satisfy delivery--hence, prospectuses and proxy 
materials can be delivered or otherwise made available using electronic 
communications and the Internet in certain circumstances.\27\ Indeed 
with respect to proxy materials, certain companies are required to post 
their proxy materials on a specified, publicly accessible Internet Web 
site (other than EDGAR) and provide record holders with a notice 
informing them that the materials are available and explaining how to 
access those materials.\28\ Second, where disclosure of information is 
required under the Exchange Act, we have allowed companies to make such 
information available to investors on their Web sites with their Web 
sites serving, depending on the circumstance, as a supplement to EDGAR, 
as an alternative to EDGAR, or as a stand-alone method of providing 
information to investors independent of EDGAR.
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    \27\ See Securities Act Rule 172 [17 CFR 230.172]; Securities 
Offering Reform Release, supra note 3; Internet Proxy Release, supra 
note 10; Enhanced Disclosure and New Prospectus Delivery Option for 
Registered Open-End Management Investment Companies, Release No. 33-
8861 (Nov. 30, 2007) [72 FR 67790] (``Mutual Fund Summary Prospectus 
Proposing Release'') (proposing to permit funds to satisfy their 
prospectus delivery obligations by sending or giving key information 
directly to investors in the form of a summary prospectus and 
providing the statutory prospectus on an Internet Web site).
    \28\ See Shareholder Choice Release, supra note 21. While large 
accelerated filers, not including registered investment companies, 
are currently required to comply with these rules, starting January 
1, 2009, these rules will apply to all filers and other soliciting 
parties. Perhaps the most significant change effected by this 
rulemaking is the shift whereby electronic availability can serve as 
the default means of delivery, with shareholders having to ``opt 
out'' to receive paper delivery. The requirement that any 
shareholder lacking Internet access, or preferring delivery of a 
paper copy of the proxy materials, can make a permanent request to 
receive a paper copy of the proxy materials (and all future proxy 
materials) at no charge mitigates concerns about Internet access. In 
adopting these notice and access model rules, we recognized that 
``[a]s technology continues to progress, accessing the proxy 
materials on the Internet should increase the utility of our 
disclosure requirements to shareholders. Information in electronic 
documents is often more easily searchable than information in paper 
documents. Shareholders will be better able to go directly to any 
section of the document that they are particularly interested in.'' 
Id. at Section VI.C.1. It is significant to note that these rules 
neither require, nor permit, solicitations pursuant to the notice 
and access model with respect to business combination transactions. 
Based on statistics compiled by Broadridge, a proxy distribution 
service provider, beneficial owner (which include retail investors) 
participation in proxy voting has diminished since the adoption of 
the notice and access model rules. See Broadridge, Notice & Access: 
Statistical Overview of Use with Beneficial Shareholders as of May 
31, 2008, available at http://broadridge.com/notice-and-access/NAStatsStory.pdf.
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    When a company Web site serves as a supplement to EDGAR, company 
information is available both on EDGAR and on the company's Web site. 
We have promoted this supplemental use of Web sites by requiring, for 
example, that:
     Companies disclose their Web site addresses in annual 
reports on Form 10-K and state whether their Exchange Act reports are 
available on their Web sites; \29\
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    \29\ Accelerated filers and large accelerated filers are 
required to disclose this information. Non-accelerated filers are 
encouraged to do so. See Item 101(e) of Regulation S-K [17 CFR 
229.101(e)].
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     Mutual funds disclose in their prospectuses whether 
shareholder reports are available on their Web sites, and if not, why 
not; \30\
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    \30\ See Item 1(b) of Form N-1A. See also Item 1.1.d. of Form N-
2 (providing a similar requirement for closed-end funds).
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     Companies make their Exchange Act reports available on 
their Web sites as a condition to incorporating by reference previously 
filed reports into prospectuses filed as part of registration 
statements on Form S-1 or Form S-11; \31\
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    \31\ See Form S-1, General Instruction VII.F [17 CFR 239.11]; 
Form S-11, General Instruction H.6 [17 CFR 239.18]. In the adopting 
release for the Form S-11 amendments, we noted that companies could 
satisfy this requirement by ``including hyperlinks directly to the 
reports or other materials filed on EDGAR or on another third-party 
Web site where the reports or other materials are made available in 
the appropriate timeframe and access to the reports or other 
materials is free of charge to the user.'' See Revisions to Form S-
11 to Permit Historical Incorporation by Reference, Release No. 33-
8909, at Section I.B.1(a) (Apr. 10, 2008) [73 FR 20512].
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     Companies post on their Web sites, if they have one, all 
beneficial ownership reports filed by officers, directors and principal 
security holders under Section 16(a) of the Exchange Act; \32\ and
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    \32\ See Exchange Act Section 16(a)(4)(C) and Rule 16a-3(k) [17 
CFR 240.16a-3(k)]. See also Mandated Electronic Filing and Web site 
Posting for Forms 3, 4 and 5, Release No. 33-8230 (May 7, 2003) [68 
FR 25787].
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     Companies post on their Web sites, if they have one, 
notice of their intent to delist or deregister their securities.\33\
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    \33\ See Exchange Act Rule 12d2-2(c)(2)(iii) [17 CFR 240.12d2-
2(c)(2)(iii)]. See also Exchange Act Rule 12d2-2(c)(3) [17 CFR 
240.12d2-2(c)(3)] (imposing a similar requirement on a national 
securities exchange to post on its Web site any notice it receives 
from a company indicating the company has determined to withdraw a 
class of securities from listing and/or registration on the 
exchange).
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    In addition, we have proposed in the Interactive Data Proposing 
Releases that companies that maintain Web sites be required to post 
their interactive data files on their Web sites.\34\
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    \34\ See Interactive Data Proposing Release, supra note 14; and 
Mutual Fund Interactive Data Proposing Release, supra note 15.
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    In some situations, we have given companies the choice and 
flexibility of satisfying an Exchange Act disclosure requirement either 
by filing the disclosure on EDGAR or by making it available on the 
company's Web site, thereby using company Web sites as an alternative 
to EDGAR. For example:
     A company may disclose non-GAAP financial measures and 
Regulation G required information on its Web site; \35\
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    \35\ See Conditions for Use of Non-GAAP Financial Measures, 
Release No. 33-8176 (Jan. 22, 2003) [68 FR 4819]. In that release, 
we recommended that companies provide ongoing Web site access to 
this information for a period of at least 12 months. Although we 
understand that some companies may be reducing such Web site access 
to a single quarter, we continue to believe that companies should 
retain the information on their Web sites for 12 months. We believe 
such a retention time period is appropriate to enable quarter-to-
quarter comparisons. Financial information disclosed on Web sites is 
still subject to the limitations on disclosure of non-GAAP financial 
information set forth in Regulation G. See id.
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     An asset-backed issuer may post disclosure of static pool 
data on its Web site rather than filing it on EDGAR; \36\
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    \36\ See Asset-Backed Securities, Release No. 33-8518, at 
Section III.B.4.b. (Dec. 22, 2004) [70 FR 1505] (``Asset-Backed 
Release'') (discussing the ability to post disclosure of static pool 
data that is required in registered sales of asset-backed securities 
on Web sites rather than filing it on EDGAR, subject to certain 
conditions). In this context, we resolved the potential conflict 
between the need to include material information in a prospectus 
offering asset-backed securities and the technical limitations of 
EDGAR that may have limited the ability of asset-backed issuers to 
provide that information in the format most useful for investors by 
adopting an alternative accommodation via which the information 
posted on a Web site will be deemed to be included in the prospectus 
when done in compliance with Item 312 of Regulation S-T [17 CFR 
232.312].
---------------------------------------------------------------------------

     A company may provide its audit, nominating or 
compensation committee charters on its Web site as an alternative to 
providing them in its proxy or information statement; \37\
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    \37\ See Instruction 2 to Item 407(b)(2) of Regulation S-K [17 
CFR 229.407(b)(2)]. As we noted above, the New York Stock Exchange 
has also implemented rules that recognize the value of company Web 
sites as an important source of corporate governance information. 
See, e.g., NYSE Listed Company Manual, Sections 303A.10 and 303A.14 
and note 17 supra.

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[[Page 45866]]

     A company may disclose a material amendment to its code of 
ethics, or a material waiver of a provision of its code of ethics, by 
posting the information on its Web site rather than filing a Form 8-K; 
\38\ and
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    \38\ See Item 406(d) of Regulation S-K [17 CFR 229.406(d)]; Item 
5.05(c) of Form 8-K [17 CFR 249.308].
---------------------------------------------------------------------------

     A company may provide information regarding board member 
attendance at the annual shareholder meeting on its Web site rather 
than in its proxy statement.\39\
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    \39\ See Instruction to Item 407(b)(2) of Regulation S-K.
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    Finally, we have recently recognized that, in very limited 
circumstances, a company's Web site can even serve as a standalone 
method of providing information to investors wholly independent of 
EDGAR. We have permitted certain foreign private issuers to use their 
Web sites as the primary or stand-alone source of information about the 
company as a basis for maintaining an exemption from Exchange Act 
registration and reporting requirements, under certain 
circumstances.\40\
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    \40\ We recently adopted new Exchange Act Rule 12h-6 [17 CFR 
240.12h-6] and accompanying rule amendments to extend the Exchange 
Act Rule 12g3-2(b) [17 CFR 240.12g3-2(b)] exemption to a foreign 
private issuer and prior Form 15 filer immediately upon its 
termination of reporting under Rule 12h-6. To maintain that 
exemption, the company must publish specified home country documents 
in English on its Internet Web site or through an electronic 
information delivery system generally available to the public in its 
primary trading markets. See Termination of a Foreign Private 
Issuer's Registration of a Class of Securities under Section 12(g) 
and Duty to File Reports Under Section 13(a) or 15(d) of the 
Securities Exchange Act of 1934, Release No. 34-55540 (Mar. 27, 
2007) [72 FR 16933]. The purpose of these provisions, and the 
additional changes that have been proposed to the availability of 
the exemption from registration pursuant to Rule 12g3-2(b), is to 
provide U.S. investors with Internet access to ongoing material 
information about a foreign private issuer that is required by its 
home country following its termination of reporting under Rule 12h-
6. See Exemption from Registration under Section 12(g) of the 
Securities Exchange Act of 1934 for Foreign Private Issuers, Release 
No. 34-57350 (Feb. 19, 2008) [73 FR 10101]. We also recently 
proposed rules that would permit exchange-traded funds to be 
actively managed provided certain conditions are met, including that 
fund composition information is maintained every business day on a 
publicly accessible Web site, with such Web site posting being the 
standalone method of providing such information to the public. See 
Exchange-Traded Funds, Release No. 33-8901 (Mar. 11, 2008) [73 FR 
14618].
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II. Application of Certain Provisions of the Federal Securities Laws to 
Information Presented on Company Web Sites

A. Evaluation of ``Public'' Nature of Information on Company Web Sites

    As we note above, there has been a dramatic increase in the use of 
company Web sites since our 2000 Electronics Release and the adoption 
of Regulation FD.\41\ Companies are providing greater amounts and types 
of information on their Web sites, which, as a result, are increasingly 
viewed by investors as key sources of information about the 
company.\42\ As companies use their Web sites to a greater extent to 
provide comprehensive information about themselves, some have raised 
questions as to the treatment of information posted on a company Web 
site under the federal securities laws.\43\ We note that such questions 
have numerous implications under the federal securities laws.\44\
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    \41\ See Selective Disclosure and Insider Trading, Release No. 
33-7881, at Section II.B.2 (Aug. 15, 2000) [65 FR 51715] 
(``Regulation FD Adopting Release'').
    \42\ See Section I, supra. There also has been significant 
growth in the use of the Internet by the public. As noted in the 
Internet Proxy Release, research submitted to the Commission during 
the comment period indicated that approximately 80% of mutual fund 
investors in the United States have access to the Internet in their 
homes. See Internet Proxy Release, supra note 10, at Section I.
    \43\ The Federal Advisory Committee on Improvements to Financial 
Reporting requested that the Commission clarify this point in its 
CIFiR Progress Report. See CIFiR Progress Report, supra note 1, at 
Chapter 4, Section III.
    \44\ See 2000 Electronics Release, supra note 4.
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    Although we have not addressed the question of whether and when 
information on a company's Web site is considered public for purposes 
of determining if a subsequent selective disclosure of such information 
may implicate Regulation FD, we believe that in view of the significant 
technological advances and the pervasive use of the Internet by 
companies, investors and other market participants since 2000, it is 
now an appropriate time to provide additional guidance regarding the 
public nature of disclosures on company Web sites for purposes of 
Regulation FD. Accordingly, we are providing guidance as to the 
circumstances under which information posted on a company Web site 
(whether by or on behalf of such company) would be considered 
``public'' for purposes of evaluating the (1) applicability of 
Regulation FD to subsequent private discussions or disclosure of the 
posted information and (2) satisfaction of Regulation FD's ``public 
disclosure'' requirement.\45\
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    \45\ We are not addressing issues relating to insider trading 
that may be implicated by disclosures on company Web sites. In 
addition, our guidance is not intended to modify the positions we 
have expressed regarding the Securities Act implications of 
disclosures on company Web sites, including when such disclosures 
may constitute offers or the implications for private offerings. For 
example, in the 2000 Electronics Release, we discussed the extent to 
which a company's use of an Internet Web site could constitute a 
``general solicitation.'' See 2000 Electronics Release, supra note 
4, at Section II.C.2.
    Our guidance also is not intended to address issues under 
Securities Act Rule 144(c) [17 CFR 230.144(c)]. We note, for 
example, that the concept of ``public information'' for non-
reporting companies contained in Rule 144(c)(2) is based on access. 
We believe that non-reporting companies should focus on the 
availability of information required by Rule 144 rather than on 
dissemination of that information as further discussed in this 
section. Likewise, under Rule 144A(d)(1)(i) [17 CFR 
230.144A(d)(1)(i)], sellers and persons acting on their behalf may 
look to publicly available financial statements for a prospective 
purchaser; and under Rule 144A(d)(4)(i), certain companies are 
required to provide access to specified company information to 
security holders and prospective purchasers. As with Rule 144, the 
concept of dissemination as we discuss in this section is not a 
condition to reliance on Rule 144A.
    Regulation FD applies to closed-end investment companies but 
does not apply to other investment companies. Exchange Act Rule 
101(b) [17 CFR 243.101(b)(definition of issuer for purposes of 
Regulation FD).
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1. Whether and When Information Is ``Public'' for Purposes of the 
Applicability of Regulation FD
    Evaluating whether and when information posted on a company Web 
site is public so that a subsequent disclosure of that information to 
an enumerated person in Regulation FD is not a disclosure of non-public 
information implicates many of the same issues that Regulation FD 
itself was adopted to address.\46\ In particular, Regulation FD was 
adopted to address the problem of selective disclosure of material 
information by companies, in which ``a privileged few gain an 
informational edge--and the ability to use that edge to profit--from 
their superior access to corporate insiders, rather than from their 
skill, acumen, or diligence.'' \47\ We must, therefore, keep that in 
mind when providing guidance on when information is considered public 
for purposes of assessing whether a subsequent selective disclosure may 
implicate Regulation FD.
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    \46\ See Regulation FD [17 CFR 243.100 et seq.].
    \47\ See Regulation FD Adopting Release, supra note 41 at 
Section II.A. In the Regulation FD Adopting Release, we stated our 
belief that Regulation FD struck an appropriate balance. It 
established a clear rule prohibiting unfair selective disclosure and 
encouraged broad public disclosure. We also believed that Regulation 
FD should not impede ordinary course business communications. See 
id. at Section II.A.4.

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[[Page 45867]]

    ``In order to make information public, it must be disseminated in a 
manner calculated to reach the securities market place in general 
through recognized channels of distribution, and public investors must 
be afforded a reasonable waiting period to react to the information.'' 
\48\ Thus, in evaluating whether information is public for purposes of 
our guidance, companies must consider whether and when: (1) A company 
Web site is a recognized channel of distribution, (2) posting of 
information on a company Web site disseminates the information in a 
manner making it available to the securities marketplace in general, 
and (3) there has been a reasonable waiting period for investors and 
the market to react to the posted information.
---------------------------------------------------------------------------

    \48\ Faberge, Inc., 45 S.E.C. 249, 255 (1973). See also 
Regulation FD Adopting Release, supra note 41, at Section II.B 
(``Information is nonpublic if it has not been disseminated in a 
manner making it available to investors generally.'').
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    With respect to the first element of this analysis, as we have 
noted above, we believe that a company's Web site can be a valuable 
channel of distribution for information about a company, its business, 
financial condition and operations.\49\ As we discuss below, whether a 
company's Web site is a recognized channel of distribution of 
information will depend on the steps that the company has taken to 
alert the market to its Web site and its disclosure practices, as well 
as the use by investors and the market of the company's Web site.
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    \49\ See Section I.B, supra. See Interactive Data Proposing 
Release, supra note 14.
---------------------------------------------------------------------------

    With respect to the second element of the analysis, the question of 
what ``disseminated'' means in the context of Web site disclosure, we 
recognize that, today, news is disseminated in an electronic world--one 
in which the accessibility to the information is not limited to reading 
a newspaper or the ``broad tape.'' There are now many different 
channels of distribution of news and other information which account 
for the rapid dissemination of news today (and also the corresponding 
capacity for rapid trading based on such information). Because 
companies of all sizes now have the capacity to present information on 
their Web sites to all investors on a broadly accessible basis, and 
because investors correspondingly have the capability to easily find 
and retrieve information about companies by searching the World Wide 
Web, we now analyze the concept of ``dissemination'' through a changed 
lens. Consequently, we believe that, in the context of a company Web 
site that is known by investors as a location of company information, 
the appropriate approach to analyzing the concept of ``dissemination'' 
for purposes of the ``public'' test as it relates to the applicability 
of Regulation FD to a subsequent disclosure should be to focus on (1) 
the manner in which information is posted on a company Web site and (2) 
the timely and ready accessibility of such information to investors and 
the markets.\50\
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    \50\ In our recent proposals regarding interactive data, we 
stated that we believed that ``Web site availability of the 
interactive data would encourage its widespread dissemination.'' 
Interactive Data Proposing Release, supra note 14, at Section 
II.B.5. In that release, we recognized the increasing role that 
company Web sites perform in supplementing the information filed 
electronically with the Commission by delivering financial and other 
disclosure directly to investors. Id.
---------------------------------------------------------------------------

    Some factors, though certainly non-exclusive ones, for companies to 
consider in evaluating whether their company Web site is a recognized 
channel of distribution and whether the company information on such 
site is ``posted and accessible'' and therefore ``disseminated,'' 
include:
     Whether and how companies let investors and the markets 
know that the company has a Web site and that they should look at the 
company's Web site for information. For example, does the company 
include disclosure in its periodic reports (and in its press releases) 
of its Web site address and that it routinely posts important 
information on its Web site?
     Whether the company has made investors and the markets 
aware that it will post important information on its Web site and 
whether it has a pattern or practice of posting such information on its 
Web site;
     Whether the company's Web site is designed to lead 
investors and the market efficiently to information about the company, 
including information specifically addressed to investors, whether the 
information is prominently disclosed on the Web site in the location 
known and routinely used for such disclosures, and whether the 
information is presented in a format readily accessible to the general 
public;
     The extent to which information posted on the Web site is 
regularly picked up by the market and readily available media, and 
reported in, such media or the extent to which the company has advised 
newswires or the media about such information and the size and market 
following of the company involved. For example, in evaluating 
accessibility to the posted information, companies that are well-
followed by the market and the media may know that the market and the 
media will pick up and further distribute the disclosures they make on 
their Web sites. On the other hand, companies with less of a market 
following, which may include many companies with smaller market 
capitalizations, may need to take more affirmative steps so that 
investors and others know that information is or has been posted on the 
company's Web site and that they should look at the company Web site 
for current information about the company;
     The steps the company has taken to make its Web site and 
the information accessible, including the use of ``push'' 
technology,\51\ such as RSS feeds, or releases through other 
distribution channels either to widely distribute such information or 
advise the market of its availability. We do not believe, however, that 
it is necessary that push technology be used in order for the 
information to be disseminated, although that may be one factor to 
consider in evaluating the accessibility to the information; \52\
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    \51\ Push technology, or server push, describes a type of 
Internet-based communication where the request for the transmission 
of information originates with the publisher or central server. It 
is contrasted with pull technology, where the request for the 
transmission of information originates with the receiver or client.
    \52\ Companies should also consider the extent to which their 
Internet infrastructure can accommodate spikes in traffic volume 
that may accompany a major company development.
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     Whether the company keeps its Web site current and 
accurate;
     Whether the company uses other methods in addition to its 
Web site posting to disseminate the information and whether and to what 
extent those other methods are the predominant methods the company uses 
to disseminate information; and
     The nature of the information.
    The third element in evaluating whether and when information posted 
on a company's Web site would be public for purposes of evaluating 
whether a subsequent selective disclosure may implicate Regulation FD 
is whether investors and the market have been afforded a reasonable 
waiting period to react to the information. What constitutes a 
reasonable waiting period depends on the circumstances of the 
dissemination, which, in the context of company Web sites, may include:
     The size and market following of the company;
     The extent to which investor oriented information on the 
company Web site is regularly accessed;
     The steps the company has taken to make investors and the 
market aware that it uses its company Web site as a key source of 
important information

[[Page 45868]]

about the company, including the location of the posted information;
     Whether the company has taken steps to actively 
disseminate the information or the availability of the information 
posted on the Web site, including using other channels of distribution 
of information; and
     The nature and complexity of the information.\53\
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    \53\ See Securities and Exchange Commission v. Texas Gulf 
Sulphur Co., 401 F.2d 833, 854 (2d Cir. 1968) (noting that ``where 
the news is of a sort which is not readily translatable into 
investment action, insiders may not take advantage of their advance 
opportunity to evaluate the information by acting immediately upon 
dissemination'').
---------------------------------------------------------------------------

    We emphasize that companies must look at the particular facts and 
circumstances in determining whether the reasonable waiting period 
element is satisfied. What may be a reasonable waiting period after 
posting information on a company Web site for a particular company and 
a particular type of information may not be one for other companies or 
other types of information. For example, a large company that 
frequently uses its Web site as a key resource for providing 
information, has taken steps to make investors and the market aware of 
this, and reasonably believes that its Web site is well-followed by 
investors and other market participants, may get comfortable with a 
waiting period that is shorter than a waiting period for a company that 
is not in the same situation.
    If the information is important, companies should consider taking 
additional steps to alert investors and the market to the fact that 
important information will be posted--for example, prior to such 
posting, filing or furnishing such information to us or issuing a press 
release with the information. Adequate advance notice of the particular 
posting, including the date and time of the anticipated posting and the 
other steps the company intends to take to provide the information, 
will help make investors and the market aware of the future posting of 
information, and will thereby facilitate the broad dissemination of the 
information.
    The question of what constitutes a reasonable waiting period has 
been frequently litigated in the context of insider trading.\54\ While 
we are not addressing when information is ``public'' for purposes of 
insider trading, the cases in this area may provide guidance to 
companies for purposes of Regulation FD. As we have noted, what 
constitutes a reasonable waiting period is a facts and circumstances 
determination.
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    \54\ See SEC v. Ingoldsby, No. 88-1001-MA, 1990 U.S. Dist. LEXIS 
11383 (D. Mass. May 15, 1990); SEC v. MacDonald, 568 F.Supp. 111, 
113 (D.R.I. 1983), aff'd, 725 F.2d 9 (1st Cir. 1984); SEC v. 
Materia, No. 82 Civ. 6225, 1983 U.S. Dist. LEXIS 11130 (S.D.N.Y. 
Dec. 5, 1983); DuPont Glore Forgan, Inc. v. Arnold Bernhard & Co., 
Inc., No. 73 Cov. 3071, 1978 U.S. Dist. LEXIS 20385 (S.D.N.Y. Mar. 
6, 1978). See also In re Apollo Group Inc. Sec. Litig., 509 F.Supp. 
2d 837, 846 (D. Ariz. 2007) (In this securities-fraud class action, 
the Court declined to adopt a bright-line rule presuming an 
immediate market reaction, based on the efficient market theory, and 
instead focused on the specific facts of each case.); In re 
Crossroads Sys., Inc., 2002 U.S. Dist. LEXIS 26716, (W.D. Tex. Nov. 
22, 2002), aff'd, Greenberg v. Crossroads Sys., Inc., 364 F.3d 657, 
660-661 (5th Cir. 2004) (In this securities-fraud class action, the 
Court employed a two-day window, concluding that an efficient market 
will digest unexpected new information within two days of its 
release.).
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    Hence, under the foregoing analysis, if information on a company's 
Web site is public, then subsequent selective disclosure of that 
information--such as to an analyst in a private conversation--would not 
trigger Regulation FD because such information, even if material, would 
not be non-public.\55\ It is important to note that, although posting 
information on a company's Web site in a location and format readily 
accessible to the general public would not be ``selective'' disclosure, 
the information may not be ``public'' for purposes of determining 
whether a subsequent selective disclosure implicates Regulation FD. If, 
however, under the foregoing analysis, information on a company's Web 
site is not public, then subsequent selective disclosure of that 
information, if material, may trigger the application of Regulation FD.
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    \55\ The standard to satisfy ``public disclosure'' in Regulation 
FD following a selective disclosure is governed by Rule 101(e).
---------------------------------------------------------------------------

2. Satisfaction of Public Disclosure Requirement of Regulation FD
    Rule 101(e) of Regulation FD requires that once a selective 
disclosure has been made, the company must file or furnish a Form 8-K 
or use an alternative method or methods of disclosure that is 
reasonably designed to provide broad, non-exclusionary distribution of 
the information to the public--simultaneously, in the case of an 
intentional disclosure, or promptly, in the case of an unintentional 
disclosure.\56\ In adopting Regulation FD in 2000, we discussed the 
role of company Web sites in satisfying the alternative public 
disclosure provisions of the regulation. At the time, we stopped short 
of concluding that disclosure on a company Web site would, itself, be 
an acceptable method of ``public disclosure'' of material non-public 
information for purposes of compliance with Regulation FD, but we 
recognized that Web site disclosure and webcasting could constitute 
integral parts of a model method of disclosure in satisfaction of the 
regulation. With regard to disclosure solely via a company Web site, we 
stated that ``[a]s technology evolves and as more investors have access 
to and use the Internet * * * we believe that some companies, whose Web 
sites are widely followed by the investment community, could use such a 
method.'' \57\
---------------------------------------------------------------------------

    \56\ See Rules 100(a) and 101(e) of Regulation FD.
    \57\ See Regulation FD Adopting Release, supra note 41, at 
Section II.B.4.b.
---------------------------------------------------------------------------

    As we stated above in the context of whether information posted on 
a company Web site would be ``public'' so that a subsequent selective 
disclosure would not implicate Regulation FD, we now believe that 
technology has evolved and the use of the Internet has grown such that, 
for some companies in certain circumstances, posting of the information 
on the company's Web site, in and of itself, may be a sufficient method 
of public disclosure under Rule 101(e) of Regulation FD. Companies will 
need to consider whether and when postings on their Web sites are 
``reasonably designed to provide broad, non-exclusionary distribution 
of the information to the public.'' \58\ To do so, companies can look 
to the factors we have outlined above regarding the first two elements 
of the analysis--whether the company Web site is a recognized channel 
of distribution and whether the information is ``posted and 
accessible'' and, therefore, ``disseminated.'' \59\ As part of that 
evaluation, companies also will need to consider their Web sites' 
capability to meet the simultaneous or prompt timing requirements for 
public disclosure once a selective disclosure has been made.\60\ 
Because the company has the responsibility for evaluating whether a 
method or combination of methods of disclosure would satisfy the 
alternative public disclosure provision of Regulation FD, it remains 
the company's responsibility to evaluate whether a posting on its Web 
site would satisfy this requirement.\61\
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    \58\ See Rule 101(e)(2) of Regulation FD.
    \59\ Under Regulation FD, when an issuer makes a selective 
disclosure, it must also provide general public disclosure, either 
simultaneously or promptly. Thus, the third element of the public 
test we discuss above--whether investors and the market have been 
afforded a reasonable waiting period to react to the information--
does not apply in analyzing whether the general public disclosure 
requirements of Regulation FD have been satisfied.
    \60\ For purposes of Regulation FD, a posting on a blog, by or 
on behalf of the company, would be treated the same as any other 
posting on a company's Web site. The company would have to consider 
the factors outlined above to determine if the blog posting could be 
considered ``public.''
    \61\ We recognized in Regulation FD that ``the issuer may use a 
method `or combination of methods' of disclosure, in recognition of 
the fact that it may not always be possible or desirable for an 
issuer to rely on a single method of disclosure as reasonably 
designed to effect broad public disclosure.'' ``[A]n issuer's 
methods of making disclosure in a particular case should be judged 
with respect to what is `reasonably designed' to effect broad, non-
exclusionary distribution in light of all the relevant facts and 
circumstances.'' Regulation FD Adopting Release, supra note 41.

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[[Page 45869]]

B. Antifraud and Other Exchange Act Provisions

    The antifraud provisions of the federal securities laws apply to 
company statements made on the Internet in the same way they would 
apply to any other statement made by, or attributable to, a 
company.\62\ This includes postings on and hyperlinks from company Web 
sites that satisfy the relevant jurisdictional tests.\63\ As we noted 
in the 2000 Electronics Release, companies should be mindful that they 
``are responsible for the accuracy of their statements that reasonably 
can be expected to reach investors or the securities markets regardless 
of the medium through which the statements are made, including the 
Internet.'' \64\
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    \62\ See, e.g., 1995 Electronics Release, supra note 25, at n. 
11 (``The liability provisions of the federal securities laws apply 
equally to electronic and paper-based media. For instance, the 
antifraud provisions of the federal securities laws as set forth in 
Section 10(b) of the Exchange Act [15 U.S.C. 78j(b)] and Rule 10b-5 
[17 CFR 240.10b-5] thereunder would apply to any information 
delivered electronically, as it does to information delivered in 
paper.''); 1996 Electronics Release, supra note 25, at Section I, n. 
4 (``The substantive requirements and liability provisions of the 
federal securities laws apply equally to electronic and paper-based 
media. For example, the antifraud provisions of the Exchange Act and 
Rule 10b-5 thereunder * * * apply to information delivered and 
communications transmitted electronically, to the same extent as 
they apply to information delivered in paper form.''); 2000 
Electronics Release, supra note 4, at Section II.B. (``It is 
important for companies * * * to keep in mind that the federal 
securities laws apply in the same manner to the content of their Web 
sites as to any other statements made by or attributable to 
them.'').
    \63\ See 2000 Electronics Release, supra note 4, at Section 
II.B.
    \64\ See 2000 Electronics Release, supra note 4, at Section 
II.B.1.
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    Accordingly, a company should keep in mind the applicability of the 
antifraud provisions of the federal securities laws, including Exchange 
Act Section 10(b) and Rule 10b-5, to the content of its Web site.\65\ 
These provisions contain a general prohibition on making material 
misstatements and omissions of fact in connection with the purchase or 
sale of securities.\66\
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    \65\ Rule 10b-5 [17 CFR 240.10b-5] makes it unlawful to ``make 
any untrue statement of a material fact or to omit to state a 
material fact necessary in order to make the statements made, in the 
light of the circumstances under which they were made, not 
misleading'' (emphasis added). See 2000 Electronics Release, supra 
note 4. In addition, Securities Act Section 17(a) [15 U.S.C. 77q(a)] 
applies to the offer and sale of securities. See also Prentice, 
supra note 18, at 542 (noting that the Commission's antifraud legal 
regime under Section 10(b) and Rule 10b-5 applies to all manner of 
electronic disclosure).
    \66\ Section 10(b) and Rule 10b-5 have a scienter requirement, 
unlike some other provisions in the federal securities laws. See, 
e.g., Securities Act Section 17(a)(2)[15 U.S.C. 77l(a)(2)]. For 
cases discussing the scienter requirement of Section 10(b) and Rule 
10b-5, see, e.g., SEC v. McNulty, 137 F.3d 732 (2d Cir. 1998), cert. 
denied, 525 U.S. 931 (1998); Lanza v. Drexel & Co., 419 F.2d 1277 
(2d Cir. 1973); Hollinger v. Titan Capital, Inc., 914 F.2d 1564, 
1569 (9th Cir. 1990); Aaron v. SEC, 446 U.S. 680 (1980).
---------------------------------------------------------------------------

    In the Rule 10b-5 context, to satisfy the materiality requirement, 
``there must be a substantial likelihood that the disclosure of the 
omitted fact would have been viewed by the reasonable investor as 
having significantly altered the ``total mix'' of information made 
available.'' \67\ Whether information posted on a company's Web site is 
considered part of the ``total mix'' for purposes of analyzing 
materiality is a facts and circumstances determination. As we discuss 
below, we believe that companies can take certain steps that affect 
whether information located on or hyperlinked from a company's Web site 
is part of such ``total mix'' of information.\68\ In this release, we 
are providing guidance regarding certain issues that arise under the 
antifraud provisions relating to disclosures on company Web sites.
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    \67\ TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 448-
449 (1976). See also Basic v. Levinson, 485 U.S. 224, 231 (1988). In 
Basic v. Levinson, the U.S. Supreme Court ``expressly adopt[ed] the 
TSC Industries standard of materiality for the Sec.  10(b) and Rule 
10b-5 context.'' Id. at 232.
    \68\ In this regard, we believe the ``buried facts'' doctrine 
applies to electronic disclosures. Under this doctrine, a court 
would consider disclosure to be false and misleading if its overall 
significance is obscured because material information is ``buried,'' 
for example, in a footnote or appendix. We have addressed the 
application of the buried facts doctrine in the context of an 
introduction or overview section of Item 303 of Regulation S-K--
Management's Discussion and Analysis of Financial Condition and 
Results of Operations and summary disclosure in plain English. In 
addition, in the context of the use of summary information in the 
electronics disclosure context we discuss in Part II.B.3 below, we 
note that the failure to include every material disclosure that is 
being summarized should not automatically trigger the ``buried 
facts'' doctrine. See Commission Guidance Regarding Management's 
Discussion and Analysis, Release No. 33-8350 (Dec. 19, 2003) [68 FR 
75056] (``MD&A Release''); Plain English Disclosure, Release No. 33-
7497 (Jan. 28, 1998) [63 FR 6370].
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    In addition, under certain of our rules, companies may disclose 
information exclusively on their Web sites rather than filing such 
disclosures or materials on EDGAR. While the provisions of Exchange Act 
Section 13(a) and Exchange Act Rules 13a-1 and 12b-20 apply to Exchange 
Act filings made by companies with the Commission, such provisions 
generally do not apply to disclosures on company Web sites. However, if 
a company fails to satisfy a Web site disclosure option that is an 
alternative to filing or furnishing an Exchange Act report, an action 
could be brought under the Exchange Act reporting provisions based on 
the company's failure to file the report.\69\
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    \69\ See, e.g., Exchange Act Section 13(a)[15 U.S.C. 
78m](requiring companies with a class of securities registered under 
the Exchange Act to file reports prescribed by the Commission) and 
Exchange Act Rule 13a-1 [17 CFR 240.13a-1](requiring such companies 
to file an annual report with the Commission).
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 1. Effect of Accessing Previously Posted Materials or Statements on 
Company Web sites
    In our 2000 Electronics Release, we discussed liability concerns 
arising from accessing previously posted materials or statements on a 
company's Web site.\70\ Since the publication of our 2000 Electronics 
Release, we understand that some companies continue to be concerned 
about whether previously posted materials or statements on their Web 
site that are accessed at a later time will be considered 
``republished'' at that later date, with attendant securities law 
liability.\71\ We understand that companies may continue to be 
concerned that they may have a duty to update the previously posted 
materials or statements if they are considered to be a new statement by 
being ``republished'' each time the materials or statements are 
accessed on the Web site.\72\ In 2005, we addressed the treatment of 
previously posted (which we called historical) information on a 
company's Web site in the context of registered offerings under the 
Securities Act.\73\ We believe it is now appropriate to provide clarity 
with respect to the treatment of such previously posted materials or 
statements under the

[[Page 45870]]

antifraud provisions of the federal securities laws.
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    \70\ See 2000 Electronics Release, supra note 4, at Section 
II.D.
    \71\ See id. at Section II.D.5. As discussed in the 2000 
Electronics Release, ``a press release disseminated over a wire 
service or through other customary means is considered to have been 
`issued' once, and thereafter is not recirculated to the 
marketplace. The same press release posted on a company's Web site 
potentially has a longer life because it provides a record that can 
be accessed by investors at any time and upon which investors 
potentially could rely when making an investment decision without 
independent verification. In effect, a statement may be considered 
to be `republished' each time that it is accessed by an investor or, 
for that matter, each day that it appears on the Web site. 
Commentators have suggested that if a statement is deemed to be 
republished, it may potentially give rise to liability under Section 
10(b) of the Exchange Act and Rule 10b-5.'' Id.
    \72\ Specifically, if previously posted information is 
considered republished, companies may be concerned that even if the 
information was accurate when initially posted or issued, it may no 
longer be current or accurate when it is accessed at a later date.
    \73\ See Securities Offering Reform Release, supra note 3, at 
Section III.D.3.b.iii.(E)(2).
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    We do not believe that companies maintaining previously posted 
materials or statements on their Web sites are reissuing or 
republishing such materials or information for purposes of the 
antifraud provisions of the federal securities laws just because the 
materials or statements remain accessible to the public. Of course, the 
antifraud provisions would apply to statements contained in posted 
materials when such statements were initially made. If a company 
affirmatively restates or reissues a statement, the antifraud 
provisions would apply to such statements when the company restates or 
reissues the statement. This affirmative restatement or reissuance may 
create a duty to update the statement so that it is accurate as of the 
date it is restated or reissued. As a general matter, we believe that 
the fact that investors can access previously posted materials or 
statements on a company's Web site does not in itself mean that such 
previously posted materials or statements have been reissued or 
republished for purposes of the antifraud provisions of the federal 
securities laws, that the company has made a new statement, or that the 
company has created a duty to update the materials or statements.
    In circumstances where it is not apparent to the reasonable person 
that the posted materials or statements speak as of a certain date or 
earlier period, then to assure that investors understand that the 
posted materials or statements speak as of a date or period earlier 
than when the investor may be accessing the posted materials or 
statements, we believe that previously posted materials or statements 
that have been put on a company's Web site should be:
     Separately identified as historical or previously posted 
materials or statements, including, for example, by dating the posted 
materials or statements; and
     Located in a separate section of the company's Web site 
containing previously posted materials or statements.\74\
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    \74\ These considerations mirror those found in Rule 433(e)(2) 
under the Securities Act [17 CFR 230.433(e)(2)].
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2. Hyperlinks to Third-Party Information
    Another area we addressed previously that continues to raise 
questions involves the use of hyperlinks to third-party 
information.\75\ Companies include on their Web sites hyperlinks to 
third-party information for a variety of reasons, including as part of 
their ongoing communications to their customers, investors and the 
markets. In our 2000 Electronics Release, we discussed the implications 
for the use of hyperlinks from company Web sites to third-party 
information in the context of both the Securities Act and the antifraud 
provisions of the federal securities laws. While we believe that the 
treatment of hyperlinks for purposes of the Securities Act is clear 
from our prior interpretation, we understand that companies continue to 
be concerned about their liability for hyperlinks to third-party 
information included on their Web sites as part of their ongoing 
communications to the public, including investors and the markets.\76\ 
In light of these concerns, we believe it is appropriate to provide 
additional guidance to companies as to the circumstances under which 
they may have liability for posted information outside the context of 
the offer and sale of securities under the Securities Act.
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    \75\ A ``hypertext link,'' or ``hyperlink,'' is an electronic 
path often displayed in the form of highlighted text, graphics or a 
button that associates an object on a web page with another web page 
address. It allows the user to connect to the desired web page 
address immediately by clicking a computer-pointing device on the 
text, graphics or button. See 2000 Electronics Release, supra note 
4, at n. 7 (citing Harvey L. Pitt & Dixie L. Johnson, Avoiding 
Spiders on the Web: Rules of Thumb for Companies Using Web sites and 
E-Mail, in Practising Law Institute, Securities Law & the Internet, 
No. 1127 (1999), at 107-118, n. 5).
    \76\ See CIFiR Progress Report, supra note 1, at Chapter 4, 
Section III.
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    Under Section 10(b) of the Exchange Act and Rule 10b-5, a company 
can be held liable for third-party information to which it hyperlinks 
from its Web site and which could be attributable to the company. As we 
explained in the 2000 Electronics Release, whether third-party 
information is attributable to a company depends upon whether the 
company has: (1) involved itself in the preparation of the information, 
or (2) explicitly or implicitly endorsed or approved the 
information.\77\ In the case of company liability for statements by 
third parties such as analysts, the courts and we have referred to the 
first line of inquiry as the ``entanglement'' theory and the second as 
the ``adoption'' theory.\78\ While we are addressing the use of 
hyperlinks to third-party information in the context of the antifraud 
provisions, this guidance does not affect our interpretation regarding 
the use of hyperlinks to third-party information in the context of 
offers and sales of securities under the Securities Act.\79\
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    \77\ See 2000 Electronics Release, supra note 4, at Section 
II.B. Of course, as stated in the 2000 Electronics Release, ``in the 
context of a document required to be filed or delivered under the 
federal securities laws, we believe that when a company embeds a 
hyperlink to a Web site within the document, the company should 
always be deemed to be adopting the hyperlinked information. In 
addition, when a company is in registration, if the company 
establishes a hyperlink (that is not embedded within a disclosure 
document) from its Web site to information that meets the definition 
of an ``offer to sell,'' ``offer for sale'' or ``offer'' under 
Section 2(a)(3) of the Securities Act, a strong inference arises 
that the company has adopted that information for purposes of 
Section 10(b) of the Exchange Act and Rule 10b-5.'' But see 
Exemption from Section 101(c)(1) of the Electronic Signatures in 
Global and National Commerce Act for Registered Investment 
Companies, Release No. 33-7877 (Jul. 27, 2000) [65 FR 47281] at 
notes 18-24 and accompanying text (clarifying how this guidance 
applies to mutual funds).
    \78\ See generally 2000 Electronics Release, supra note 4 at 
Sections II.A.4. and II.B.1. As we stated in the 2000 Electronics 
Release, ``[i]n the case of hyperlinked information, liability under 
the `entanglement' theory would depend upon a company's level of 
pre-publication involvement in the preparation of the information. 
In contrast, liability under the `adoption' theory would depend upon 
whether, after its publication, a company, explicitly or implicitly 
endorses or approves the hyperlinked information.''
    \79\ See Securities Offering Reform Release, supra note 3, at 
Section III.D.3.b.iii.(E); 2000 Electronics Release, supra note 4, 
at Section II.B.1.; Securities Act Rule 433.
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    Our focus in the 2000 Electronics Release was to help companies 
understand what factors may be relevant in determining whether they 
have adopted hyperlinked information.\80\ We explained that the 
following, non-exhaustive list of factors may influence that analysis:
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    \80\ Some commenters on the 2000 Electronics Release criticized 
the ``facts-and-circumstances'' approach we adopted, arguing that it 
leads to uncertainty and could result in companies providing less 
useful information to investors. See, e.g., comment letters from The 
Bond Market Association and Fidelity Investments, which are publicly 
available at http://www.sec.gov/rules/interp/s71100.shtml or at our 
Public Reference Room at 100 F Street, NE., Washington DC 20549 in 
File No. S7-11-00.
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     Context of the hyperlink--what the company says about the 
hyperlink or what is implied by the context in which the company places 
the hyperlink;
     Risk of confusing the investors--the presence or absence 
of precautions against investor confusion about the source of the 
information; and
     Presentation of the hyperlinked information--how the 
hyperlink is presented graphically on the Web site, including the 
layout of the screen containing the hyperlink.\81\
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    \81\ See 2000 Electronics Release, supra note 4, at Section 
II.B.1.
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    We understand that some companies may still wish for further 
elaboration of some of the issues addressed regarding the application 
of the adoption theory. Accordingly, we are providing further guidance 
on these issues as they relate to the adoption theory.

[[Page 45871]]

    In evaluating the potential antifraud liability of a company under 
the adoption theory with respect to third-party information to which 
the company provides a hyperlink in the context of providing 
information about the company and its business, we believe the focus 
should be on whether a company has explicitly or implicitly approved or 
endorsed the statement of a third-party such that the company should be 
liable for that statement. Because an explicit approval or endorsement 
is, by definition, plainly evident, the analytical scrutiny is on the 
circumstances or conditions under which a company can fairly be said to 
have implicitly approved or endorsed a third-party statement by 
hyperlinking to that information. The key question in the hyperlinking 
context, therefore, is: Does the context of the hyperlink and the 
hyperlinked information together create a reasonable inference that the 
company has approved or endorsed the hyperlinked information?
    We believe that in evaluating whether a company has implicitly 
approved or endorsed information on a third-party Web site to which it 
has established a hyperlink, one important factor is what the company 
says about the hyperlink, including what is implied by the context in 
which the company places the hyperlink.\82\ In considering the context 
of the hyperlink, we begin with the assumption that providing a 
hyperlink to a third-party Web site indicates that the company believes 
the information on the third-party Web site may be of interest to the 
users of its Web site. Otherwise, it is unclear to us why the company 
would provide the link. To avoid potential confusion or 
misunderstanding about what the company's view or opinion is with 
respect to the information to which the company has provided a 
hyperlink, the company should consider explaining the context for the 
hyperlink--and thereby make explicit, rather than implicit, why the 
hyperlink is being provided. For example, a company might explicitly 
endorse the hyperlinked information or suggest that the hyperlinked 
information supports a particular assertion on the company's Web site. 
Alternatively, a company might simply note that the third-party Web 
site contains information that may be of interest or of use to the 
reader.
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    \82\ We note that companies can have different audiences for 
different pages on their Web sites. For example, a consumer products 
company may have customer-oriented pages, or supplier-oriented 
pages, on its Web site, as well as investor-oriented pages, such as 
an investor relations page. Because of its context, a third-party 
hyperlink on a customer-oriented page--for example, the company 
manufactures laundry detergent and provides a link to a third-party 
clothing care Web site--has different implications from a securities 
law perspective than a hyperlink to a research analyst's report on 
an investor-oriented page.
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    The nature and content of the hyperlinked information also should 
be considered in deciding how to explain the context for the hyperlink. 
The degree to which a company is making a selective choice to hyperlink 
to a specific piece of third-party information likely will indicate the 
extent to which the company has a positive view or opinion about that 
information. For example, a company including a hyperlink to a news 
article that is highly laudatory of management should consider 
explanatory language about the source and why the company is providing 
the hyperlink in order to avoid the inference that the company is 
commenting on or even approving its accuracy, or was involved in its 
preparation. Conversely, the more general or broad-based the 
hyperlinked information is, the company may consider providing a more 
general explanation. For example, if a company has a media page and 
simply provides hyperlinks to recent news articles, both positive and 
negative, about the company, the risk that a company may have liability 
regarding a particular article or that it endorses or approves of each 
and every news article may be reduced. In this case, a title such as 
``Recent News Articles'' may be all the explanation that a company may 
determine is needed to avoid being considered to have adopted the 
materials.\83\
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    \83\ Of course, a further explanation may be necessary depending 
on the manner by which a company limits the sources of its recent 
news articles. For example, if a company only includes recent news 
articles published by bullish industry journals, the limited nature 
of the sources should be clear and the company should explain why it 
selected the sources identified.
    In addition, any SEC-registered investment adviser (or 
investment adviser that is required to be SEC registered) that 
includes, in its Web site or in other electronic communications, a 
hyperlink to postings on third-party Web sites, should carefully 
consider the applicability of the advertising provisions of the 
Investment Advisers Act of 1940 (``Advisers Act''). Under the 
Advisers Act, it is a fraudulent act for an investment adviser to, 
among other things, refer to testimonials in its advertisements. See 
Section 206(4) of the Advisers Act [15 U.S.C. 806-6(4)]; Rule 
206(4)-1(a)(1) [17 CFR 275.206(4)-1(a)(1)].
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    In addition to an explanation of why a company is including 
particular hyperlinks on its Web site, a company also may determine to 
use other methods, including ``exit notices'' or ``intermediate 
screens,'' to denote that the hyperlink is to third-party information. 
While the use of ``exit notices'' or ``intermediate screens'' helps to 
avoid confusion as to the source of the third-party information, no one 
type of ``exit notice'' or ``intermediate screen'' will absolve 
companies from antifraud liability for third-party hyperlinked 
information.\84\ For example, if there is only one analyst report out 
of many that provides a positive outlook on the company's prospects, 
and the company provides a hyperlink to the one positive analyst report 
and to no other, and does not mention the fact that all the other 
analyst reports are negative on the company's prospects, then even the 
use of an ``exit notice'' or ``intermediate screen'' or explanatory 
language may not be sufficient to avoid the inference that the company 
has approved or endorsed the one positive analyst's report.
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    \84\ We do not believe that the failure to use ``exit notices'' 
or ``intermediate screens'' should automatically result in a 
determination that a company has adopted third-party information.
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    With regard to the use of disclaimers generally, as we noted in the 
2000 Electronics Release, we do not view a disclaimer alone as 
sufficient to insulate a company from responsibility for information 
that it makes available to investors whether through a hyperlink or 
otherwise.\85\ Accordingly, a company would not be shielded from 
antifraud liability for hyperlinking to information it knows, or is 
reckless in not knowing, is materially false or misleading. This would 
be the case even where the company uses a disclaimer and/or other 
features designed to indicate that it has not adopted the false or 
misleading information to which it has provided the hyperlink. Our 
concern is that an alternative approach could result in unscrupulous 
companies using disclaimers as shields from liability for making false 
or misleading statements. We again remind companies that specific 
disclaimers of antifraud liability are contrary to the policies 
underpinning the federal securities laws.\86\
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    \85\ See 2000 Electronics Release, supra note 4, at Section 
II.B.1.a. and n. 61.
    \86\ See id.
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3. Summary Information
    A third area in which we are providing guidance is with respect to 
companies' use of summaries or overviews to present information, 
particularly financial information, on their Web sites.\87\ We 
understand that

[[Page 45872]]

some companies may be concerned as to the treatment of summary or 
overview information contained on their Web sites under the antifraud 
provisions of the federal securities laws.\88\ By definition, these 
summaries or overviews do not, without more, include the more detailed 
information from which they are derived or on which they are based.
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    \87\ Our discussion is intended to provide guidance generally 
regarding a company's use of summarized information. This guidance 
does not supersede more specific requirements covering the use of 
summaries or their content that are or may be contained in our 
rules. See e.g., Mutual Fund Summary Prospectus Proposing Release, 
supra note 27.
    \88\ See CIFiR Progress Report, supra note 1, at Chapter 4, 
Section III.
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    We have encouraged and, in some cases, required the inclusion of 
summaries or overviews in prospectuses and in Exchange Act reports to 
highlight important information for investors.\89\ We believe that 
summary information can be particularly appropriate and helpful to 
investors, such as when it relates to lengthy or complex information. 
For similar reasons, we believe the use of summaries or overviews on 
Web sites can be helpful to investors. We note, however, that summaries 
or overviews standing alone and which a reasonable person would not 
perceive as summary, and which do not provide additional information to 
alert a reader as to where more detailed information is located, could 
result in investors not necessarily understanding that the statements 
should be read in the context of the information being summarized. 
Consequently, when using summaries or overviews on Web sites, companies 
should consider ways to alert readers to the location of the detailed 
disclosure from which such summary information is derived or upon which 
such overview is based, as well as to other information about a company 
on a company's Web site.
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    \89\ We have encouraged or required summaries or overviews in 
the following contexts:
     We have suggested that Management's Discussion and 
Analysis disclosures could benefit from an introductory section or 
overview providing context for the more detailed information 
following it and thereby facilitating a reader's understanding of 
the disclosures. See MD&A Release, supra note 68. In that release, 
we also encouraged companies to consider using other means of 
providing clearer disclosure, such as tabular presentations and the 
use of section headings to assist readers in following the flow of 
the MD&A. We have also encouraged companies to use a ``layered'' 
approach in their MD&A disclosures.
     We adopted the Compensation Discussion and Analysis 
section in Regulation S-K Item 402 to provide a narrative, 
analytical overview to executive compensation disclosure. See 
Executive Compensation and Related Person Disclosure, Release No. 
33-8732A, at Section I (Aug. 29, 2006) [71 FR 53158].
     We require prospectuses to include a plain English 
``summary of the information in the prospectus where the length or 
complexity of the prospectus makes a summary useful.'' See Item 
503(a) of Regulation S-K [17 CFR 229.503(a)].
     We recently proposed rules that would require key 
information to appear in a summary section at the front of mutual 
fund prospectuses. See Mutual Fund Summary Prospectus Proposing 
Release, supra note 27.
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    In presenting information in a summary format or as part of an 
overview, companies should consider the context in which such 
information is presented. Just as with hyperlinks to third-party 
information, companies should consider using appropriate explanatory 
language to identify summary or overview information. As an example, a 
summary page on a company Web site that is identified and presented in 
a manner similar to an introductory page in a ``glossy'' annual 
report--with graphs and charts illustrating key performance metrics 
derived from financial statements contained in later pages of the same 
document--would likely be viewed as a summary. Conversely, where 
summary information is not identified as such, the reader may be 
confused and fail to appreciate that the information is not complete.
    We encourage companies that use summaries or overviews of more 
complete information located elsewhere on their Web sites to consider 
employing disclosure and other techniques designed to highlight the 
nature of summaries or overviews in order to help minimize the chance 
that investors would be confused as to the level of incompleteness 
inherent in these disclosures. To this end, companies may wish to 
consider the following techniques that may highlight the nature of 
summary or overview information:
     Use of appropriate titles. An appropriate title or heading 
that conveys the summary, overview or abbreviated nature of the 
information could help to avoid unnecessary confusion;
     Use of additional explanatory language. Companies may 
consider using additional explanatory language to identify the text as 
a summary or overview and the location of the more detailed 
information;
     Use and placement of hyperlinks. Placing a summary or 
overview section in close proximity to hyperlinks to the more detailed 
information from which the summary or overview is derived or upon which 
the overview is based could help an investor understand the appropriate 
scope of the summary information or overview while making clearer the 
context in which the summary or overview should be viewed; \90\ and
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    \90\ We believe this approach is analogous to the ``envelope'' 
theory, which describes how and when information from different 
sources may be deemed to have been delivered together. In the 1995 
Electronics Release, supra note 25, we explained that documents 
appearing in close proximity to each other on the same Web page and 
documents hyperlinked together will be considered delivered 
together, analogizing it to delivery of the information in paper 
form in the same envelope. Id. at Questions 15 and 16. Similarly, 
providing hyperlinks to the complete information from which the 
summary is derived or upon which an overview is based can lead to 
this information being considered to be provided together or, at a 
minimum, directing the reader to the location of the more detailed 
information.
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     Use of ``layered'' or ``tiered'' format. In addition to 
providing hyperlinks to more complete information, companies can 
organize their Web site presentations such that they present the most 
important summary or overview information about a company on the 
opening page, with embedded links that enable the reader to drill down 
to more detail by clicking on the links.\91\ In this way, viewers can 
follow a logical path into, and thereby obtain increasingly greater 
details about, the financial statements, a company's strategy and 
products, its management and corporate governance, and the many other 
areas in which investors and others may have an interest.
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    \91\ We have taken a similar approach in our proposed rules 
regarding prospectus delivery for open-end mutual funds. See the 
Mutual Fund Summary Prospectus Proposing Release, supra note 27.
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4. Interactive Web Site Features
    We believe that it is important to provide guidance that will 
promote robust use by companies of their Web sites. One example of such 
robust use is making the company Web site interactive. We note that 
companies are increasingly using their Web sites to take advantage of 
the latest interactive technologies for communicating over the Internet 
with various stakeholders, from customers to vendors and investors. 
These communications can take various forms, ranging from ``blogs'' to 
``electronic shareholder forums.'' Since all communications made by or 
on behalf of a company are subject to the antifraud provisions of the 
federal securities laws, companies should consider taking steps to put 
into place controls and procedures to monitor statements made by or on 
behalf of the company on these types of electronic forums.\92\
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    \92\ Whether an individual is acting on behalf of a company 
will, as always, be a facts and circumstances determination. We note 
that companies generally have policies on who may speak on behalf of 
the company and on maintaining the confidentiality of company 
information for purposes of Regulation FD compliance and insider 
trading and tipping liability.
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    Company-sponsored ``blogs,'' which can include CEO blogs and 
investor relations blogs, among others, are recent additions to company 
Web sites.\93\

[[Page 45873]]

Companies can use these for a variety of purposes, including allowing 
for the exchange of opinions and ideas between a company's management 
or certain other employees and its various stakeholders.\94\ The open 
format of blogs makes them an attractive forum for ongoing 
communications between and among companies and their clients, 
customers, suppliers, shareholders and other stakeholders.
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    \93\ A ``blog'' has been defined as ``[a] Web site (or section 
of a Web site) where users can post a chronological, up-to-date e-
journal entry of their thoughts. [I]t is an open forum communication 
tool that, depending on the Web site, is either very individualistic 
or performs a crucial function for an organization or company. There 
are three basic varieties of blogs: those that post links to other 
sources, those that compile news and articles, and those that 
provide a forum for opinions and commentary.'' See http://www.netlingo.com/lookup.cfm?term=blog.
    \94\ For example, a manufacturing company could sponsor a blog 
for its staff tasked with designing, developing and troubleshooting 
products. Vendors and end-users likely would find such a forum 
helpful. Shareholders also may welcome the opportunity to view and/
or join a discussion of the uses of a company's existing products to 
better understand one of the means a company derives revenues, 
especially with the ``front-line'' employees responsible for those 
products.
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    Similar to blogs, electronic shareholder forums can serve as a 
means for investors to communicate with companies and each other and to 
provide investor feedback on various issues in a real-time basis, and 
we have adopted rules to encourage their use.\95\ These forums are 
designed to promote interactive communication--between and among the 
company and its various stakeholders and with the public at large.
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    \95\ See Electronic Shareholder Forums, Release No. 34-57172 
(Jan. 18, 2008) [73 FR 4450] (``Shareholder Forum Release''). In 
this release, we adopted amendments to the proxy rules to clarify 
that participation in an electronic shareholder forum that could 
potentially constitute a solicitation subject to the proxy rules is 
exempt from most of the proxy rules if all of the conditions to the 
exemption are satisfied. In addition, the amendments state that a 
shareholder, company, or third party acting on behalf of a 
shareholder or company that establishes, maintains or operates an 
electronic shareholder forum will not be liable under the federal 
securities laws for any statement or information provided by another 
person participating in the forum. The amendments did not provide an 
exemption from Rule 14a-9 [17 CFR 240.14a-9], which prohibits fraud 
in connection with the solicitation of proxies. The general 
disclosure obligations under the federal securities laws continue to 
apply to these forums as well. See id. at n. 88 (referring 
participants in shareholder forums to the requirements of Regulation 
FD); and id. at n. 24 (reminding participants that the antifraud 
provisions of Rule 14a-9 may require a participant in a forum that 
otherwise allows anonymity to identify itself if failure to do so in 
the circumstance would result in omission of a ``material fact 
necessary in order to make the statements therein not false or 
misleading.'').
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    We acknowledge the utility these interactive Web site features 
afford companies and shareholders alike, and want to promote their 
growth as important means for companies to maintain a dialogue with 
their various constituencies. As we noted in the Shareholder Forum 
Release, companies may find these forums ``of use in better gauging 
shareholder interest with respect to a variety of topics,'' and the 
forums ``could be used to provide a means for management to communicate 
with shareholders by posting press releases, notifying shareholders of 
record dates, and expressing the views of the company's management and 
board of directors.'' \96\ Accordingly, we are providing the following 
guidance for companies hosting or participating in blogs or electronic 
shareholder forums:
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    \96\ See id. at Section I.
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     The antifraud provisions of the federal securities laws 
apply to blogs and to electronic shareholder forums. As stated above, 
companies are responsible for statements made by the companies, or on 
their behalf, on their Web sites or on third party Web sites, and the 
antifraud provisions of the federal securities laws reach those 
statements. While blogs or forums can be informal and conversational in 
nature, statements made there by the company (or by a person acting on 
behalf of the company) will not be treated differently from other 
company statements when it comes to the antifraud provisions of the 
federal securities laws. Employees acting as representatives of the 
company should be aware of their responsibilities in these forums, 
which they cannot avoid by purporting to speak in their ``individual'' 
capacities.
     Companies cannot require investors to waive protections 
under the federal securities laws as a condition to entering or 
participating in a blog or forum. Any term or condition of a blog or 
shareholder forum requiring users to agree not to make investment 
decisions based on the blog's or forum's content or disclaiming 
liability for damages of any kind arising from the use or inability to 
use the blog or forum is inconsistent with the federal securities laws 
and, we believe, violates the anti-waiver provisions of the federal 
securities laws.\97\ A company is not responsible for the statements 
that third parties post on a Web site the company sponsors, nor is a 
company obligated to respond to or correct misstatements made by third 
parties. The company remains responsible for its own statements made 
(including statements made on its behalf) in a blog or a forum.\98\
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    \97\ See Securities Act Section 14 [15 U.S.C. 77n]; Exchange Act 
Section 29(a) [15 U.S.C. 78cc]; Section 47(a) of the Investment 
Company Act of 1940 (``Investment Company Act'') [15 U.S.C. 80a-
46(a)] and Section 215(a) of the Advisers Act [15 U.S.C. 806-15].
    \98\ See, e.g., Rule 14a-17(b) [17 CFR 240.14a-17(b)]. Of 
course, the company may be held responsible under the ``adoption 
theory'' or ``entanglement theory'' if the company adopts, endorses, 
or approves the statement. See generally Section II.B.2., supra.
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C. Disclosure Controls and Procedures

    Postings on a company's Web site also may implicate Exchange Act 
rules governing certification requirements relating to disclosure 
controls and procedures.\99\ Under these rules, a company's principal 
executive officer and principal financial officer must certify that 
they are responsible for establishing and maintaining disclosure 
controls and procedures, that such controls and procedures have been 
designed to ensure that material information relating to the company is 
made known to them, that they have evaluated the effectiveness of the 
disclosure controls and procedures as of the end of a reporting period, 
and that they have disclosed in the company's periodic report for that 
reporting period their conclusions about the effectiveness of those 
controls and procedures.\100\
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    \99\ Exchange Act Rules 13a-15(e) [17 CFR 240.13a-15(e)] and 
15d-15(e) [17 CFR 240.15d-15(e)] and Investment Company Act Rule 
30a-3(c) [17 CFR 270.30a-3(c)] define ``disclosure controls and 
procedures'' as those controls and procedures designed to ensure 
that information required to be disclosed by the company in the 
reports that it files or submits under the Exchange Act is:
    (1) ``recorded, processed, summarized and reported, within the 
time periods specified in the Commission's rules and forms,'' and
    (2) ``accumulated and communicated to the company's management * 
* * as appropriate to allow timely decisions regarding required 
disclosure.''
    \100\ See Exchange Act Rule 13a-14(a) [17 CFR 240.13a-14(a)]; 
Exchange Act Rule 15d-14(a)[17 CFR 240.15d-14(a)]; Item 
601(b)(31)(i) of Regulation S-K [17 CFR 229.601(b)(31)(i)]; 
Investment Company Act Rule 30a-2(a) [17 CFR 270.30a-2(a)].
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    As discussed above in Section I.B, we have adopted rules permitting 
companies to satisfy certain Exchange Act disclosure obligations by 
posting that information on their Web sites as an alternative to 
providing that information in an Exchange Act report.\101\ If a company 
elects to satisfy such disclosure obligations by posting the 
information on its Web site, disclosure controls and procedures would 
apply to such information because it is information required to be 
disclosed by the company in Exchange Act reports. Failure to make those 
disclosures on the company's Web site would result in an Exchange Act 
report being incomplete. For example, if the company failed to disclose 
waivers of its code of ethics on its Web site, it would need to file an 
Item 5.05 Form 8-K; if the company

[[Page 45874]]

failed to disclose its board policy on director attendance at the 
annual meeting of security holders on its Web site, it would need to do 
so in its proxy statement.\102\ Hence, companies must make sure that 
their disclosure controls and procedures are designed to address the 
disclosure of such information on their Web sites.
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    \101\ See Section I.B, supra.
    \102\ See Instruction to Item 407(b)(2) of Regulation S-K [17 
CFR 229.407(b)(2)].
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    On the other hand, disclosure controls and procedures do not apply 
to other disclosures of information on a company's Web site. This means 
that the principal executive officer and principal financial officer 
will not be disclosing their conclusions regarding the effectiveness of 
any controls that a company may have in place regarding its Web site 
disclosure of information, other than those controls with respect to 
information that is posted as an alternative to being provided in an 
Exchange Act report. That said, other disclosures on a company's Web 
site are subject to antifraud liability, and companies also need to 
consider whether such disclosures are in compliance with Regulation FD, 
the Securities Act, and the federal proxy rules, among others.

D. Format of Information and Readability

    The nature of online information is increasingly interactive, not 
static. The inability to print a particular browser screen or 
presentation, particularly one designed for interactive viewing and not 
for reading outside the electronic context, is not inherently 
detrimental to its readability. We do not think it is necessary that 
information appearing on company Web sites satisfy a printer-friendly 
standard \103\ unless our rules explicitly require it.\104\ For 
example, our notice and access model requires that electronically 
posted proxy materials be presented in a format ``convenient for both 
reading online and printing on paper.'' \105\ Hence, all other 
information on a company's Web site need not be made available in a 
format comparable to paper-based information.\106\
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    \103\ See 1996 Electronics Release, supra note 25 at Section 
II.A.2. We use the term ``printer-friendly'' to describe a version 
of a web page that is formatted for printing. For example, if a web 
page includes advertising and navigation, those items may be removed 
to format the relevant content for printing on standard size paper.
    \104\ For example, Exchange Act Rule 14a-16(c) [17 CFR 240.14a-
16(c)] requires proxy materials to be presented in a format 
convenient for both reading online and printing in paper when 
delivered electronically. See the text accompanying note [97] supra. 
See Shareholder Choice Release, supra note 21, at n. 35: ``We 
believe that requiring readable and printable formats is important 
so that shareholders have meaningful access to the proxy 
materials.'' Similarly, proposed Rule 498 under the Securities Act 
would permit the obligation to deliver a statutory prospectus 
relating to a mutual fund to be satisfied by sending or giving a 
summary prospectus and providing the statutory prospectus online. If 
provided online, proposed Securities Act Rule 498(f)(2)(i) would 
require that the statutory prospectus be presented in a format that 
is ``convenient for both reading online and printing on paper.'' See 
Mutual Fund Summary Prospectus Proposing Release, supra note 27, at 
Section II.B.3. and n. 113.
    \105\ See Exchange Act Rule 14a-16(c); Internet Proxy Release, 
supra note 10, at n. 82.
    \106\ See 1996 Electronics Release, supra note 25, at Section 
II.A.2. As we noted in the 2000 Electronics Release, if special 
software is required in order to view information aimed at investors 
that a company puts on its Web site, we believe the company should 
make a free, downloadable version of the software available on the 
Web site or the site should contain information on the location 
where the required software may be downloaded free of charge so that 
all investors can effectively access the information provided. In 
the case of interactive data, we have taken a different approach. We 
have proposed that companies that maintain Web sites post on their 
Web sites the same interactive data they file or furnish with 
certain Exchange Act reports and Securities Act registration 
statements. We have not proposed, however, that registrants also 
provide interactive data viewers (or information on how to obtain 
viewers) on their Web sites. Instead, we have determined to allow 
third parties to develop viewers, anticipating that these viewers 
will, over time, become more readily accessible at a little or no 
cost to investors. The Commission makes several interactive data 
viewers available through its Web site at http://www.sec.gov/spotlight/xbrl/xbrlwebapp.shtml. See Interactive Data Proposing 
Releases, supra note 14, at Section II.A, and supra note 15.
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III. Request for Comment

    We invite interested parties to submit written comment on any other 
approaches or issues involved in facilitating the use of electronic 
media, including as a result of technological developments, to further 
the disclosure purposes of the federal securities laws.

List of Subjects in 17 CFR Parts 241 and 271

    Securities.

Amendment of the Code of Federal Regulations

0
For the reasons set out in the preamble, Title 17 Chapter II of the 
Code of Federal Regulations is amended as set forth below:

PART 241--INTERPRETIVE RELEASES RELATING TO THE SECURITIES EXCHANGE 
ACT OF 1934 AND GENERAL RULES AND REGULATIONS THEREUNDER

0
Part 241 is amended by adding Release No. 34-58288 and the release date 
of August 1, 2008, to the list of interpretive releases.

PART 271--INTERPRETIVE RELEASES RELATING TO THE INVESTMENT COMPANY 
ACT OF 1940 AND GENERAL RULES AND REGULATIONS THEREUNDER

0
Part 271 is amended by adding Release No. IC-28351 and the release date 
of August 1, 2008, to the list of interpretive releases.

    By the Commission.

    Dated: August 1, 2008.
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-18148 Filed 8-6-08; 8:45 am]
BILLING CODE 8010-01-P