Compiled and edited by Stephen J. Schulte with the assistance of Steven J. Spencer as a project of the Committee on Securities Regulation of the Bar Association of the City of New York

In response to the rapid growth of the Internet and its increased use by public companies, issuers, underwriters and broker-dealers, the SEC and other regulatory organizations have promulgated a number of rules and interpretations addressing the use of the Web for disseminating information. The following is a compendium of SEC and NASD releases, no-action letters and other pronouncements relating to the Internet. The index does not include materials relating to (i) the SEC's Electronic Data Gathering and Retrieval System (EDGAR), (ii) national securities exchanges and alternative trading systems, or (iii) SEC or NASD enforcement actions or other administrative proceedings.

1) Thomson Financial Services, Inc. No-Action Letter (October 8, 1993)
  • electronic confirmation messages generated and distributed by electronic trade confirmation system satisfy the confirmation requirements of Rule 10b-10 under the Exchange Act
  • no assurance given with regard to storage of electronic confirmations satisfying the recordkeeping requirements of Rules 17a-3 and 17a-4 under the Exchange Act
  • electronic confirmation message treated as an original communication under Rules 204-2(a)(7) and 204-2(b)(3) under the Investment Advisers Act
  • electronic confirmation message treated as a record of original entry under Rules 31a-1(b)(1) and 31a-1(b)(12) under the Investment Company Act
2) Brown & Wood No-Action Letter (February 17, 1995)
  • definition of "prospectus" includes a prospectus encoded in electronic format
  • electronic transmission of prospectus encoded in electronic format satisfies the requirement that a prospectus be sent or given for purposes of the Securities Act
3) SEC Release No. 34-36076 (August 9, 1995)
  • Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Approving Proposed Rule Change Relating to Advertising and Sales Literature Filing and Review Requirements Under the Rules of Fair Practice and the Government Securities Rules
  • SEC approves proposed change to NASD Rules of Fair Practice which would, among other things, include electronic messages within the definitions of "advertisement" and "sales literature"
4) NASD Notice to Members 95-74 (September 1995)
  • NASD confirms its position that it has consistently applied its standards for communications with the public to electronic messages sent via computer
  • amendment of Rules of Fair Practice to, among other things, include electronic messages within the definitions of "advertisement" and "sales literature"
5) NASD Notice to Members 95-80 (September 26, 1995)
  • same obligations under the NASD Rules of Fair Practice relative to communications with the public sent electronically via computer as with regard to any other type of communication
6) SEC Release Nos. 33-7233; 34-36345 (October 6, 1995)
  • Use of Electronic Media for Delivery Purposes
7) Generic SEC Comment Letter (February 15, 1996)
  • no objection to proxy solicitation material containing a supplemental method for shareholders to vote electronically by using a telephonic or other electronic voting system, if specifically permitted by applicable state law, provided certain conditions are satisfied
8) Spring Street Brewing Company No-Action Letter (April 17, 1996)
  • SEC raises concerns relating to bulletin board-based stock trading mechanism
9) SEC Release Nos. 33-7288; 34-37182 (May 9, 1996)
  • Use of Electronic Media by Broker-Dealers, Transfer Agents, and Investment Advisers for Delivery of Information; Additional Examples Under the Securities Act of 1933, Securities Exchange Act of 1934, and Investment Company Act of 1940
10) SEC Release Nos. 33-7289; 34-37183 (May 9, 1996)
  • Use of Electronic Media for Delivery Purposes (adoption of technical amendments premised on the distribution of paper documents)
11) Munder Capital Management No-Action Letter (May 17, 1996)
  • portfolio transaction information made available via the Internet, which reflects only services provided to specific funds and does not refer to services provided to other clients of registered investment adviser, should not be considered an advertisement for the advisory services of the investment adviser
12) Real Goods Trading Corporation No-Action Letter (June 24, 1996)
  • "off the grid" trading system would not require (i) that offers or sales made through the system be registered under the Securities Act, (ii) registration as a broker-dealer under the Exchange Act, (iii) registration under the Investment Advisers Act, or (iv) registration as an exchange under the Exchange Act
13) IPONET No-Action Letter (July 26, 1996)
  • reference in Rule 134(d) to "an enclosed or attached coupon or card, or in some other manner" would be applicable to the acceptance of indications of interest via electronic coupon or card
  • password protected access for accredited and sophisticated investors to certain investment opportunities would not be deemed to involve any form of "general solicitation" or "general advertising" within the meaning of Regulation D of the Securities Act
14) NASD Notice to Members 96-50 (July 1996)
  • emphasizing to members their supervisory and regulatory responsibilities, as well as their obligations to customers, when dealing with stocks promoted on the Internet or other electronic media, and their supervisory obligations with respect to the use of such media by their associated persons
15) PerfectData Corporation No-Action Letter (August 5, 1996)
  • "off the grid" trading system would not require (i) that offers or sales made through the system be registered under the Securities Act, (ii) registration as a broker-dealer under the Exchange Act, (iii) registration under the Investment Advisers Act, or (iv) registration as an exchange under the Exchange Act
16) Angel Capital Electronic Network ("ACE-Net") No-Action Letter (October 25, 1996)
  • network and network operators not required to register as (i) a national securities exchange, (ii) investment advisers, or (iii) broker-dealers, when providing accredited investors with Internet access to listings of small corporate offerings
17) The Flamemaster Corporation No-Action Letter (October 29, 1996)
  • "off the grid" trading system would not require (i) that offers or sales made through the system be registered under the Securities Act, (ii) registration as a broker-dealer under the Exchange Act, or (iii) registration as an exchange under the Exchange Act
18) Charles Schwab & Co., Inc. No-Action Letter (November 27, 1996)
  • agreements between on-line services and registered broker-dealer to provide for a nominal, flat per order fee in connection with on-line service providing gateway to brokerage services would not require registration as a broker-dealer under the Exchange Act
19) ITT Corporation No-Action Letter (December 6, 1996)
  • including the issuer's Internet address in a registration statement accompanied by language that states "our SEC filings are also available to the public from our [W]eb site" will not, by itself, incorporate into the registration statement information posted on or hyperlinked to the Web site
20) Baltimore Gas and Electric Company No-Action Letter (January 6, 1997)
  • including the issuer's Internet address in a registration statement accompanied by language that states "our SEC filings are also available to the public from our [W]eb site" will not, by itself, incorporate into the registration statement information posted on or hyperlinked to the Web site
21) SEC Release No. 34-38245 (February 5, 1997)
  • Reporting Requirements for Brokers or Dealers Under the Securities Exchange Act of 1934
  • amendment of broker-dealer record preservation rule to allow for records to be maintained by electronic storage media
22) Private Financial Network No-Action Letter (March 12, 1997)
  • video transmissions of public offering road shows made to a limited number of subscribers, and subject to certain conditions, are not prospectuses within the meaning of Section 2(10) of the Securities Act
23) Nalco Chemical Company No-Action Letter (May 6, 1997)
  • company may exclude shareholder proposal that would require the company to give stockholders a choice of receiving hard copies of the company’s annual and quarterly reports or accessing the reports over the Internet from the company’s Web site because such proposal relates to the ordinary business operations of the company
24) SEC Release No. 34-38591 (May 9, 1997)
  • Self-Regulatory Organizations; Order Approving Proposed Rule Change by NASD Regulation, Inc. Relating to the Submission of Information in Electronic Form
25) Lamp Technologies, Inc. No-Action Letter (May 29, 1997)
  • information relating to private investment companies and posted on a privately maintained password-protected Web site with limited access to subscribers who are accredited investors would not (i) involve "general solicitation or general advertising" within the meaning of Regulation D of the Securities Act, (ii) constitute a public offering of securities by a participating fund within the meaning of the Investment Company Act, or (iii) cause any investment adviser to a participating fund to be deemed to be holding itself out generally to the public as an investment adviser within the meaning of the Investment Advisers Act
  • SEC orally clarified its position to permit hedge funds to post fund information on the Internet without charging viewers a subscription fee, see Internet Compliance Alert (December 15, 1997)
26) Net Roadshow, Inc. No-Action Letter (September 8, 1997)
  • transmissions of public offering road shows over the Internet to qualified investors, subject to certain conditions, are not prospectuses within the meaning of Section 2(10) of the Securities Act
27) Charles Schwab & Co., Inc. No-Action Letter (September 18, 1997)
  • agreements by a registered broker-dealer to compensate on-line information providers for content made available on the broker-dealer's Web site would not require the information provider or its employees to register as brokers or dealers under the Exchange Act
28) The Securities Transfer Association, Inc. No-Action Letter (October 24, 1997)
  • a bank may place on its Web site: (i) a list of issuers for which it sponsors certain open-market stock purchase plans ("Plan(s)") and (ii) the related Plan materials, and an issuer may place on its Web site: (i) a notice of Plan availability and (ii) a hyperlink to the sponsoring bank's Web site; in each case, subject to certain conditions, without complying with the Securities Act's registration provisions
29) Interpretive Letter from NASDR Director of Advertising/Investment Companies Regulation (November 11, 1997)
  • in specified circumstances, an NASD member is not responsible for the content or filing of materials posted on a third party's Internet site to which the member's Internet site is linked
30) SEC Release No. 34-39356 (November 25, 1997)
  • Self-Regulatory Organizations; Order Approving Proposed Rule Change by National Association of Securities Dealers Inc. Relating to the Electronic Delivery of Information Between Members and Their Customers
31) Interpretive Letter from NASDR Office of General Counsel (November 26, 1997)
  • permitted use of electronic signatures under certain conditions in approving new customer accounts and securities transactions under NASD Rules 3110(c)(1)(C) and 3010(d)
32) Bloomberg L.P. No-Action Letter (December 1, 1997)
  • audiovisual transmissions of public offering road shows to qualified subscribers over Bloomberg's multi-media system, and subject to certain conditions, are not prospectuses within the meaning of Section 2(10) of the Securities Act
33) Internet Capital Corporation No-Action Letter (December 18, 1997; as revised on December 24, 1997)
  • a third party's electronic posting and delivery of prospectuses and other offering materials for unaffiliated companies may be implemented under certain circumstances without requiring registration as a broker-dealer under the Exchange Act
34) Travelers Group, Inc. No-Action Letter (December 19, 1997)
  • company may exclude shareholder proposal that would require the company to offer each shareholder the option of accessing the company’s periodic reports on the company’s Internet Web site, in lieu of paper copies, because such proposal relates to the ordinary business operations of the company
35) Internet Capital Corporation No-Action Letter (December 22, 1997; as supplemented on January 13, 1998)
  • a third party's passive bulletin board to facilitate the trading of securities of unaffiliated companies may be implemented under certain circumstances without requiring registration (i) as a national securities exchange, (ii) as a broker-dealer under the Exchange Act, (iii) as an investment adviser under the Investment Advisers Act, or (iv) of offers and sales under Section 5 of the Securities Act
36) SEC Release No. 34-39510 (December 31, 1997)
  • Self-Regulatory Organizations; Order Approving Rule Change and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 1 to the Proposed Rule Change by the National Association of Securities Dealers, Inc. Relating to Supervision and Record Retention Rules
  • order approving proposed NASD rule change to provide NASD members with flexibility in developing reasonable procedures for the review of correspondence (including electronic correspondence) with the public
37) NASD Notice to Members 98-3 (January 1998)
  • policy regarding the delivery of information by electronic means between members and their customers
38) NASD Notice to Members 98-11 (January 1998)
  • guidance on implementing amendments to rules regarding supervision, review, and record retention of correspondence
39) SEC Release No. 33-7497 (January 28, 1998) (Plain English Adopting Release)
  • prospectuses delivered electronically must include the table of contents immediately after the cover page
  • encourages, with respect to certain registration forms, inclusion of the registrant's Internet address
40) Net Roadshow, Inc. No-Action Letter (January, 30 1998)
  • transmissions of road shows relating to Rule 144A offerings of unaffiliated parties made over the Internet exclusively to "qualified institutional buyers", and subject to certain conditions, are permissible under Rule 144A
41) NASD Notice to Members 98-18 (February 1998)
  • annual compliance meetings under NASD Rule 3010 may be conducted by electronic means, provided that certain safeguards are met
42) Chevron Corp. No-Action Letter (February 10, 1998)
  • company may exclude shareholder proposal requiring the board to report to shareholders on a method for creating a "Community Internet Forum" because the proposal was untimely filed
43) Merck & Co., Inc. No-Action Letter (February 10, 1998)
  • company may exclude shareholder proposal giving shareholders the option of receiving hard copies of the company’s periodic reports or accessing these reports from the company’s Internet Web site because the proponent did not hold at least 1% or $1000 worth of the company’s voting stock for one year as required by Exchange Act Rule 14a-8(a)(1)
44) Prodigy Services Corporation No-Action Letter (March 9, 1998)
  • subject to certain conditions, an Internet service provider may develop and operate a Web site in which members may access materials relating to dividend reinvestment and share purchase plans ("DRSPPs") and engage in certain related transactions, including electronic enrollment, investment and fund transfers
45) Pinnacle West Capital Corporation No-Action Letter (March 11, 1998)
  • corporation may exclude a reference to a third party's Web site, as requested in a shareholder proposal, where the corporation has no assurances as to the truth or accuracy of the information contained on the site
46) SEC Interpretive Release Nos. 33-7516; 34-39779 (March 23, 1998)
  • Use of Internet Web Sites to Offer Securities, Solicit Securities Transactions, or Advertise Investment Services Offshore
47) NASD Internet Guide for Registered Representatives
http://www.nasdr.com/4040.htm (May 1998)
  • sets forth general liability concerns and compliance requirements regarding Internet communications and gives specific guidance for e-mail, group e-mail, chat rooms, bulletin boards, and Web sites
48) Excalibur Technologies Corp. No-Action Letter (May 4, 1998)
  • company may exclude shareholder proposal requiring company to post its public filings on its Internet Web site because such proposal relates to the ordinary business operations of the company
49) Technology Funding Securities Corporation Exemptive Order (May 20, 1998)
  • a broker-dealer subsidiary of a public fund's investment manager may accept credit card payments for fund shares sold over the Internet, provided that certain conditions are met
50) Lamp Technologies, Inc. No-Action Letter (May 29, 1998)
  • modified the company's May 1997 no-action letter to eliminate the fixed subscription fee requirement and the requirement that all subscribers be "qualified eligible participants," as defined under the Commodity Exchange Act
51) International Association for Financial Planning No-Action Letter (June 1, 1998)
  • investment advisers that are required to be registered under Section 203 of the Investment Advisers Act may participate in a national trade association's advertising and referral program that involves providing adviser information over the Internet without the association being treated as a solicitor for purposes of Rule 206(4)-3 of the Investment Advisers Act
52) Templeton Dragon Fund, Inc. No-Action Letter (June 15, 1998)
  • fund may omit from a supporting statement of a shareholder resolution a reference to the proponent's Internet site
53) StockPower Inc. No-Action Letter (July 24, 1998)
  • company may provide investors with on-line access to certain DRSPP prospectuses and allow investors to communicate purchase and sale orders and payment directly to the appropriate bank transfer agents, without the company or any of its employees registering as a broker-dealer under Section 15(a) of the Exchange Act
54) SEC Release No. 34-40365 (August 26, 1998)
  • Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Approving Proposed Rule Change and Amendment No. 1 Thereto and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 2 to Proposed Rule Change Relating to Standards for Individual Correspondence
  • order approving proposed NASD rule change relating to standards for written or electronic communications prepared for a single customer
55) NASD Notice to Members 98-77 (September 1998)
  • executive representatives must maintain Internet e-mail account by January 1, 1999
56) Thomson Financial Services, Inc. No-Action Letter (September 4, 1998)
  • audiovisual transmissions of public offering road shows to qualified investors over the Internet or Thomson's private network, subject to certain conditions, are not prospectuses within the meaning of Section 2(10) of the Securities Act
57) Staff Legal Bulletin No. 8 (September 9, 1998)
  • addresses broker-dealer procedures in the event of a market-wide circuit breaker trading halt, including requirements relating to broker-dealer Web sites
58) StockPower Inc. No-Action Letter (November 3, 1998)
  • companies that sponsor direct stock purchase plans may post plan prospectuses and related materials on their Web sites and investors may electronically communicate purchase and sale orders directly to the companies' bank transfer agents without the companies registering as broker-dealers under Section 15 of the Exchange Act
59) SEC Release No. 34-40723 (November 30, 1998)
  • Self Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Approving Proposed Rule Change and Amendment No. 1 Thereto and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 2 to the Proposed Rule Change Relating to Supervision of Correspondence
  • order approving proposed rule change, superseding requirement set forth in NASD Notice to Members 98-11 that required review of all incoming correspondence (including electronic correspondence) directed to an NASD member's investment banking or securities business
60) Evare, LLC No-Action Letter (November 30, 1998)
  • subject to certain conditions, a company linking money managers, broker-dealers and custodians via its on-line communication system need not register as a broker-dealer
61) Special NASD Notice to Members 98-108 (December 1998)
  • extends deadline to February 1, 1999 for updating firm contact information via the NASD Regulation Web site to include the executive representative's e-mail address
62) Emerging Germany Fund, Inc. No-Action Letter (December 22, 1998)
  • fund may omit from a supporting statement of a shareholder resolution the proponent's reference to an Internet site
63) Merrill Lynch & Co., Inc. No-Action Letter (January 13, 1999)
  • footnote 56 in SEC Interpretive Release No. 34-39779 was intended to be read only in context and was not intended to address the question of whether a registered broker-dealer's Web site constitutes a "solicitation" for other purposes
64) NASDR Guidance to Investors Regarding Stock Volatility and On-line Trading (January 26, 1999) (available at )
  • warns investors of the potential consequences of price and volume volatility
65) Vanderkam & Sanders No-Action Letter (January 27, 1999)
  • issuing securities in consideration of a person’s registration on or visit to an issuer’s Web site would be an event of sale within the meaning of Section 2(a)(3) of the Securities Act and, as a result, such an issuance would violate Section 5 of the Securities Act unless the offering was registered or subject to a valid exemption from registration
66) SEC Release No. 34-40988 (January 28, 1999)
  • Self Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Granting Approval of Proposed Rule Change Relating to Issuer Responsibilities When Using the Internet; Updating MarketWatch Contact Information and Other Matters
  • order granting approval of proposed NASD rule change relating to issuers disseminating information to investors over the Internet
67) NASD Notice to Members 99-11 (February 1999)
  • guidance suggesting appropriate types of disclosure that NASD firms should consider making to retail customers to educate them about the risks of price and volume volatility
68) NASD Notice to Members 99-12 (February 1999)
  • guidance concerning the operation of NASD firms' order execution systems and procedures during extreme market conditions
69) Net Roadshow, Inc. SEC Staff Oral Guidance (February 1999)
  • subject to certain conditions, Net Roadshow was permitted to expand access to its Web-based road show to individual accredited investors, see Allyson Vaughan, Firm Gets Approval From SEC to Include Individuals in Virtual Roadshows, Corporate Financing Week (February 8, 1999)
70) CommScan L.L.C. No-Action Letter (February 3, 1999)
  • subject to certain conditions, a company may publish on its Web site a list of institutions that have certified to the company that they are qualified institutional buyers
71) Simplystocks.com No-Action Letter (February 4, 1999)
  • issuing securities in consideration of a person’s registration on or visit to an issuer’s Web site would be an event of sale within the meaning of Section 2(a)(3) of the Securities Act and, as a result, such an issuance would violate Section 5 of the Securities Act unless the offering was registered or subject to a valid exemption from registration
72) SEC Release No. 34-41356 (April 30, 1999)
  • Broker-Dealer Registration and Reporting
  • amends Form BDW and related filing procedures to allow filing of Form BDW on the new Internet-based Central Registration Depository System
73) NASD Notice to Members 99-36 (May 1999)
  • reminds NASD members to report executive representative and address changes over the Internet
74) NASD Notice to Members 99-37 (May 1999)
  • reminds NASD members of their obligations regarding electronic distribution of Nasdaq and OTC market data
75) SEC Release No. 34-41442 (May 25, 1999)
  • Recordkeeping Requirements for Transfer Agents
  • proposed amendments to Rule 17Ad-7 of the Exchange Act to allow registered transfer agents to use electronic storage media to produce and preserve required records
76) Andrew Jones and James Rutten No-Action Letter (June 8, 1999)
  • issuing securities in consideration of a person's registration with an issuer, whether or not through the issuer's Web site, would be an event of sale within the meaning of Section 2(a)(3) of the Securities Act and, as a result, such an issuance would violate Section 5 of the Securities Act unless the offering was registered or subject to a valid exemption from registration
77) Harris Corporation No-Action Letter (June 30, 1999)
  • participation by affiliates of issuer in bank-sponsored open-availability stock plan using Internet facilities, subject to certain conditions, would not trigger registration under Section 5 of the Securities Act or regulatory consequences under Regulation M of the Exchange Act
78) Wit Capital Corporation No-Action Letter (July 14, 1999)
  • subject to certain conditions, the staff will permit certain practices and procedures in connection with firm commitment IPOs, including those relating to conditional offers to purchase securities
79) SEC Release No. 34-41672 (July 30, 1999)
  • Broker-Dealer Registration and Reporting Amendments
  • adopts a contingency plan in the event that the NASD's new Internet-based Central Registration Depository System does not become operational on schedule
80) Activate.net Corporation No-Action Letter (September 21, 1999)
  • audiovisual transmission of public offering road shows to qualified investors over the Internet, subject to certain conditions, are not prospectuses within the meaning of Section 2(a)(10) of the Securities Act
81) Charles Schwab & Co., Inc. No-Action Letter (November 15, 1999)
  • audiovisual transmissions over the Internet of public offering road shows to certain investment advisers and to retail investors with a minimum level of trading experience or asset accumulation, subject to certain conditions, are not prospectuses within the meaning of Section 2(a)(10) of the Securities Act
82) Report by SEC Commissioner Laura S. Unger (November 22, 1999)
  • On-Line Brokerage: Keeping Apace of Cyberspace
  • summarizes the findings from a series of on-line investing roundtable discussions, focusing on the issues of suitability, best execution, market data, systems capacity, investor education, on-line discussion forums, privacy and portals