SEC Will Provide New E-Delivery Guidance
November 22, 1999
ORLANDO, Fla. - The Securities and Exchange Commission by year-end will issue additional guidelines on electronic delivery that will elaborate on guidelines it issued three years ago, according to an SEC official.
Douglas Scheidt, associate director and chief counsel for the division of investment management at the SEC, announced the commission's plans last week at the Investment Company Institute's operations conference here.
The commission will spell out in detail what qualifies as express, informed consent by a shareholder to receive prospectuses and other shareholder communications by e-mail, Scheidt said. It will also provide details on what qualifies as implied consent and inform fund companies whether negative consent - a fund company's notice that all future communications will be delivered electronically unless the shareholder contacts the fund to say otherwise - is permissible, Scheidt said.
One clarification the SEC may make is that the fact a customer provides an e-mail address can not, at least for now, be considered, "implied consent," Scheidt said.
Although e-mail addresses may eventually become as commonplace as U.S. postal addresses, "the SEC's guidance has been in the context in which we live," Scheidt said. "Today, not all people have computers or are comfortable with electronic delivery."
The SEC's interpretive release will further address the question of systems failures, systems incompatibilities and how far a mutual fund company must go to ensure delivery of an electronic document, Scheidt said.
Scheidt did not disclose the substance of the anticipated SEC guideline on this issue but posed the questions the commission was addressing.
"If e-mail delivery is unsuccessful, can [a fund company] post [a prospectus or other document] on its web site? Access is not equal to delivery," Scheidt said.
The release will also address SEC's recently passed house-holding rule that permits a fund company to send only one prospectus to a household where more than one shareholder in a particular fund resides, Scheidt said. The rule will guide fund companies in determining who should receive paper and who need not.
The SEC will also address an issue last addressed by the International Organization of Securities Commissioners in 1998 concerning whether expatriates from various nations - be they Americans or foreigners - should be permitted to have access to their mutual fund or retirement savings accounts online, Scheidt said.