Commission Guidance on the Use of Company Web Sites, 45862-45874 [E8-18148]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 73, Number 153 (Thursday, August 7, 2008)]
[Rules and Regulations]
[Pages 45862-45874]
From the Federal Register Online via the Government Printing 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 (https://
www.sec.gov/rules/interp.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number S7-23-08 on the subject line; or
     Use the Federal eRulemaking Portal (https://
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 (https://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 https://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 https://
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 https://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 https://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 https://
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 https://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 https://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

[[Page 45865]]

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 https://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].
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     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].
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     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.
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    \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.
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    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.
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    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'').
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    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).
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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\
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    \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.
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    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 Re