THE INTERNET AND THE
CYBERSECURITIES MARKETPLACE
Denis T. Rice, July
1998
Table of Contents
I. Introduction.
A. Background: Information and Communication
Capabilities of the Internet.
B. The Mushrooming Use of the Internet for Securities
Transactions.
II. The Internet
As A Means To Market New Securities.
A. Introductory.
B. The Regulatory Framework For Cybersecurities.
1. Federal Regulation.
a. Importance of Consent of the Recipient to
Electronic Transmission of Information.
b. Importance of Timely Notice, Effective Access,
and Reasonable Assurance of Delivery of Information.
2. State Regulation.
C. Public Offerings of Securities on the Web.
1. General Regulatory Considerations.
2. Underwritten Offerings Over the Internet.
3. Conducting "Roadshows" Over the Internet.
4. Mutual Fund Offerings and the Internet.
5. Direct Public Offerings ("DPOs").
a. Regulatory Considerations.
b. Examples of DPOs.
c. Sites Providing Interaccess Between Groups of
Potential Investors and a Number of DPOs.
D. Nonpublic Internet Offerings.
III. Secondary
Trading of Securities in Cyberspace.
A. Discount Broker-Dealers.
B. Full Service Broker-Dealers.
C. Banks and Internet Discount Trading.
D. "Membership"-Type Trading
by Institutions.
E. The Effect of Online Discount Trading
on Suitability and Other Obligations of Broker-Dealers.
F. Clearing, Back Office Operations
and Market Data.
G. Bulletin Boards and Message Groups
as Secondary Trading Tools on the Web.
H. "Membership"-Type Trading
for the Public.
I. Effects of Electronic Trading on
Stock Exchanges.
IV. The
Internet As an Information and Services Tool.
A. Use by Mutual Funds to
Offer Services and Disseminate Information.
B. Sites Offering Individual
Investors News, Research and Analysis.
V. Internet
Securities and the Jurisdiction Reach of Securities Laws.
A. Background: Basic
Jurisdictional Principles under the U.S. Constitution and under International
Law.
B. Conflict Between
the Internet and Jurisdictional Boundaries.
C. Applying U.S. Constitutional Principles to Internet Jurisdiction.
D. Jurisdiction of Blue-Sky Laws Over Internet
Transactions.
1. Issuance of Securities.
2. Broker-Dealers and Investment Advisers.
E. Applying Federal Securities Laws To
Foreign Web Sites.
1. Jurisdictional Basis.
2. Enforcement Activities, Federal and
State.
VI. Conclusion.
The Extensive Footnotes to this Article
have been omitted. If you wish a copy, please contact us at mary@freeadvice.com.
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