Statement of the Commission Regarding Use of Internet Web Sites to Offer Securities, Solicit Securities Transactions or Advertise Investment Services Offshore

SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 231, 241, 271, 276

[Release Nos. 33-7516, 34-39779, IA-1710, IC-23071; International

Series Release No. 1125]

Statement of the Commission Regarding Use of Internet Web Sites

to Offer Securities, Solicit Securities Transactions or Advertise

Investment Services Offshore

AGENCY: Securities and Exchange Commission.

ACTION: Interpretation.

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SUMMARY: The Securities and Exchange Commission is publishing its views

on the application of the registration obligations under the U.S.

federal securities laws to the use of Internet Web sites to disseminate

offering and solicitation materials for offshore sales of securities

and investment services.

EFFECTIVE DATE: March 23, 1998.

FOR FURTHER INFORMATION CONTACT: Paul Dudek, Chief, and Rani Doyle,

Attorney, Office of International Corporate Finance at 202-942-2990

(with respect to Securities Act issues); Paula Jenson, Deputy Chief

Counsel, Division of Market Regulation, at 202-942-0073 (with respect

to broker-dealer registration issues), Elizabeth King, Senior Special

Counsel, Division of Market Regulation, at 202-942-0140 (with respect

to exchange registration issues); and Karrie McMillan, Assistant Chief

Counsel, Sarah A. Wagman, Special Counsel, and Brendan C. Fox,

Attorney, Division of Investment Management, at 202-942-0660 (with

respect to matters relating to investment companies and investment

advisers).

SUPPLEMENTARY INFORMATION:

I. Executive Summary

The Internet permits market participants to disseminate

advertisements and other information regarding securities and

investment services across national borders. Because persons in the

United States have access to this securities-related information,

market participants have expressed uncertainty about the application of

the registration requirements of the U.S. securities laws to their

offshore Internet offers (i.e., offers over Internet Web sites of

securities or investment services that by their terms are not made to

U.S. persons). Today, we are providing our views on how issuers,

investment companies, broker-dealers, exchanges and investment advisers

may use Internet Web sites to solicit offshore securities transactions

and clients without the securities or investment company being

registered with the Commission under the Securities Act of 1933\1\ or

the Investment Company Act of 1940,\2\ or without the investment

service provider registering under the Investment Advisers Act of

1940,\3\ or the broker-dealer or exchange registering under the broker-

dealer and exchange registration provisions under the Securities

Exchange Act of 1934.\4\

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\1\ 15 U.S.C. 77a, et seq. (the ``Securities Act'').

\2\ 15 U.S.C. 80a-1, et seq. (the ``Investment Company Act'').

\3\ 15 U.S.C. 80b-1, et seq. (the ``Advisers Act'').

\4\ 15 U.S.C. 78a, et seq. (the ``Exchange Act'').

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The purpose of this interpretation is to clarify when the posting

of offering or solicitation materials on Internet Web sites would not

be considered activity taking place ``in the United States.'' We are

only providing clarification on this aspect of the registration

requirements and are not altering the fundamental requirement that all

offers and sales in

[[Page 14807]]

the United States be registered under the U.S. securities laws or made

under an applicable exemption.

Under this interpretation, application of the registration

provisions of the U.S. securities laws depends on whether Internet

offers, solicitations or other communications are targeted to the

United States. We would not view issuers, broker-dealers, exchanges,

and investment advisers that implement measures that are reasonably

designed to guard against sales or the provision of services to U.S.

persons to have targeted persons in the United States with their

Internet offers. Under these circumstances, Internet postings would

not, by themselves, result in a registration obligation under the U.S.

securities laws.

The determination of whether measures reasonably designed to guard

against sales to U.S. persons have been implemented depends on the

facts and circumstances, and can be satisfied through different means.

We discuss in this release examples of measures that are adequate to

serve this purpose for both U.S. and foreign entities. We also discuss

why measures that are adequate for foreign issuers would not

necessarily be adequate measures for U.S. issuers. U.S. issuers should

undertake more restrictive measures when using the Internet to solicit

offshore securities transactions.

This interpretation does not address the anti-fraud and anti-

manipulation provisions of the securities laws, which will continue to

reach all Internet activities that satisfy the relevant jurisdictional

tests.\5\ Even in the absence of sales in the United States, we will

take appropriate enforcement action whenever we believe that fraudulent

or manipulative Internet activities have originated in the United

States or placed U.S. investors at risk. Further, we are not addressing

the circumstances under which a U.S. court could exercise personal

jurisdiction over a non-U.S. person with respect to that person's

offshore Internet offer.

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\5\ The courts have recognized U.S. jurisdiction over fraudulent

conduct where substantial conduct or effects occur in the United

States. See generally Itoba Ltd. v. LEP Group PLC, 54 F.3d 118 (2d

Cir. 1995), cert. denied, 516 U.S. 1044 (1996) and Robinson v. TCI/

US West Communications Inc., 117 F.3d 900 (5th Cir. 1997) (citing

Schoenbaum v. Firstbrook, 405 F.2d 200 (2d Cir.), rev'd on other

grounds on rehrg. en banc, 405 F.2d 215 (2d Cir. 1968), cert.

denied, 395 U.S. 906 (1969) (effects test)); Bersch v. Drexel

Firestone Inc., 519 F.2d 974 (2d Cir.), cert. denied, 423 U.S. 1018

(1975) (conduct test); Leasco Data Processing Equipment Corp. v.

Maxwell, 468 F.2d 1326 (2d Cir. 1972) (conduct test).

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The interaction between the U.S. securities laws and the Internet

can be expected to continue to evolve. As technology and practice

develop, we may revisit these and related issues.

II. Background

A. The Global Reach of the Internet

The development of the Internet presents numerous opportunities and

benefits for consumers and investors throughout the world. It also

presents significant challenges for regulators charged with protecting

consumers and investors. Regulators in many countries are attempting to

administer their respective laws to preserve important protections

provided by their regulatory schemes without stifling the Internet's

vast communications potential.\6\ We share this goal in our

administration of the U.S. securities laws.\7\

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\6\ See President William J. Clinton and Vice President Albert

Gore, Jr., A Framework for Global Electronic Commerce (1997),

http://www.iitf.nist.gov/eleccomm/ecomm.htm>; European Ministerial

Conference, ``Global Information Networks: Realizing the

Potential,'' July 6-8, 1997, Ministerial Declaration, Global

Informational Networks, http://www2.echo.lu/bonn/final.html>.

\7\ For a discussion of recent Commission actions addressing the

Internet, see The Impact of Recent Technological Advances on the

Securities Markets, Report prepared by the Staff of the U.S.

Securities and Exchange Commission pursuant to Section 510(a) of the

National Securities Markets Improvements Act of 1996 (Oct. 1997)

http://www.sec.gov/news/studies/techrp97. htm>.

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Information posted on Internet Web sites concerning securities and

investments can be made readily available without regard to geographic

and political boundaries.\8\ Additionally, the interactive nature of

the Internet makes it possible for investors to purchase electronically

the securities or services offered. For these and other reasons, we

believe that the use of the Internet by market participants and

investors presents significant issues under the U.S. securities laws.

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\8\ Wilske and Schiller, International Jurisdiction in

Cyberspace: Which States May Regulate the Internet?, http://

www.law.indiana.edu/fcj/pubs/v50/no1/wilske.html>, Section

II.A.2.(c).

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Although this release focuses on Internet Web sites, the Internet

offers a variety of forms of communication. We distinguish between Web

site postings and more targeted Internet communication methods. More

targeted communication methods are comparable to traditional mail

because the sender directs the information to a particular person,

group or entity. These methods include e-mail and technology that

allows mass e-mailing or ``spamming.'' Information posted on a Web

site, however, is not sent to any particular person, although it is

available for anyone to search for and retrieve.\9\ Offerors using

those more targeted technologies must assume the responsibility of

identifying when their offering materials are being sent to persons in

the United States and must comply fully with the U.S. securities laws.

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\9\ The Web site sponsor can aid Internet searches by adding

``tags'' to its Web site that facilitate a search engine identifying

the site as containing information relating to targeted topics.

Generally, we will not view the use of tags relating to securities

or investments as transforming the Web site into a targeted

communication that would require additional measures to assure

against sales to U.S. persons, such as blocking access by U.S.

persons to the offering materials.

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B. Regulation of Offers

Many registration requirements under the U.S. securities laws are

triggered when an offer of securities or financial services, such as

brokerage or investment advisory services, is made to the general

public.

Under the Securities Act, absent an exemption, an issuer

that offers or sells securities in the United States through use of the

mails or other means of interstate commerce must register the offering

with the Commission.\10\ An offering of securities may be exempt from

registration if it is conducted as a ``private placement,'' without any

general solicitation of investors.\11\

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\10\ Section 5 of the Securities Act, 15 U.S.C. 77e.

\11\ See, e.g., Section 4(2) of the Securities Act, 15 U.S.C.

77d(2); Regulation D [17 CFR 230.501-508].

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Under the Investment Company Act, a foreign investment

company may not use the mails or other means of interstate commerce to

publicly offer its securities in the United States or to U.S. persons

unless the investment company receives an order from the Commission

permitting it to register under the Investment Company Act.\12\ A

foreign investment company may, however, make a private offer of its

securities in the United States or to U.S. persons in reliance on one

of the exclusions from the definition of ``investment company'' under

the Investment Company Act.\13\

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\12\ Section 7(d) of the Investment Company Act, 15 U.S.C. 80a-

7(d).

\13\ See Section 3(c)(1) and Section 3(c)(7) of the Investment

Company Act, 15 U.S.C. 80a-3(c)(1), 15 U.S.C. 80a-3(c)(7). See also

Staff no-action letter, Goodwin, Procter & Hoar (available Feb. 28,

1997) (``Goodwin Procter'').

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Under the Advisers Act, an adviser is prohibited from

using the mails or other means of interstate commerce in connection

with its business as an investment adviser, unless the adviser is

registered with the Commission, or is exempted or excluded from the

requirement to register.\14\

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\14\ Section 203(a) of the Advisers Act, 15 U.S.C. 80b-3(a).

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Under the Exchange Act, a broker or dealer generally must

register with the Commission if it uses the mails or any means of

interstate commerce to effect

[[Page 14808]]

transactions in, or to induce or attempt to induce the purchase or sale

of, any security.\15\

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\15\ Section 15(a) of the Exchange Act, 15 U.S.C. 78o(a).

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Under the Exchange Act, an exchange generally must

register with the Commission if it uses the mails or any means of

interstate commerce for the purpose of using its facilities to effect

any transaction in a security or to report any such transaction.\16\

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\16\ Section 6 of the Exchange Act, 15 U.S.C. 78f.

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The posting of information on a Web site may constitute an offer of

securities or investment services for purposes of the U.S. securities

laws.\17\ Our discussion of these issues will proceed on the assumption

that the Web site contains information that constitutes an ``offer'' of

securities or investment services under the U.S. securities laws.\18\

Because anyone who has access to the Internet can obtain access to a

Web site unless the Web site sponsor adopts special procedures to

restrict access, the pertinent legal issue is whether those Web site

postings are offers in the United States that must be registered.

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\17\ See, e.g., Securities Act Release No. 7233, Question 20

(Oct. 6, 1995) [60 FR 53458] (``The placing of the offering

materials on the Internet would not be consistent with the

prohibition against general solicitation or advertising in Rule

502(c) of Regulation D.'').

\18\ We also assume that the Internet is an instrument of

interstate commerce and that its use satisfies the ``jurisdictional

means'' requirements of the federal securities laws. See American

Library Ass'n v. Pataki, 969 F. Supp. 160, 161 (S.D.N.Y. 1997).

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III. Offshore Offers and Solicitations on the Internet

A. General Approach

Some may argue that regulators could best protect investors by

requiring registration or licensing for any Internet offer of

securities or investment services that their residents could access. As

a practical matter, however, the adoption of such an approach by

securities regulators could preclude some of the most promising

Internet applications by investors, issuers, and financial service

providers.

The regulation of offers is a fundamental element of federal and

some U.S. state securities regulatory schemes. Absent the transaction

of business in the United States or with U.S. persons, however, our

interest in regulating solicitation activity is less compelling.\19\ We

believe that our investor protection concerns are best addressed

through the implementation by issuers and financial service providers

of precautionary measures that are reasonably designed to ensure that

offshore Internet offers are not targeted to persons in the United

States or to U.S. persons.\20\

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\19\ Under a resolution adopted by the North American Securities

Administrators Association (``NASAA''), states are encouraged to

take appropriate steps to exempt Internet offers from the

registration provisions of their securities laws when the offers

indicate that the securities are not being offered to residents of

their state and the offers are not otherwise specifically made to

any persons in their state. Sales of the securities that were the

subject of the Internet offer could be made in that state after the

offering has been registered and the final prospectus has been

delivered to investors, or where the sales are exempt from

registration. NASAA, Resolution Regarding Securities Offered on the

Internet (adopted Jan. 7, 1996), 1996 CCH Par. 7040 (Jan. 1996).

According to NASAA, 32 states have implemented the resolution

and 15 states have indicated an intent to do so.

Several foreign authorities have provided guidance on Internet

and securities related issues. See, e.g., Policy Statement 107 on

Electronic Prospectuses (Sept. 1996) http://www.asc.gov.au>

(Australia); Notice and Interpretation Note, Trading Securities and

Providing Advice Respecting Securities on the Internet (Mar. 3,

1997), NIN #97/9 (British Columbia, Canada).

\20\ We use the term ``U.S. person'' as it is defined in Rule

902(k) of Regulation S under the Securities Act [17 CFR 230.902(k)],

which is premised on residence in the United States, regardless of

any temporary presence outside the United State. See Securities Act

Release No. 7505 (Feb. 18, 1998) [63 FR 9632 (Feb. 25, 1998)]

(renumbering CFR sections). ``U.S. person'' generally has the same

meaning for purposes of Section 7(d) of the Investment Company Act

as under Rule 902(k) of Regulation S under the Securities Act. See

Goodwin Procter, supra note 13. For purposes of this release, we

deem Internet offers ``targeted at the United States'' to include

Internet offers targeted to U.S. persons. Cf. Rule 902(h)(2) of

Regulation S [17 CFR 230.902(h)(2)] (offers targeting identifiable

groups of U.S. persons offshore are not offshore transactions).

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B. Procedures Reasonably Designed to Avoid Targeting the United States

When offerors implement adequate measures to prevent U.S. persons

from participating in an offshore Internet offer, we would not view the

offer as targeted at the United States and thus would not treat it as

occurring in the United States for registration purposes. What

constitutes adequate measures will depend on all the facts and

circumstances of any particular situation. We generally would not

consider an offshore Internet offer made by a non-U.S. offeror as

targeted at the United States, however, if:

The Web site includes a prominent disclaimer making it

clear that the offer is directed only to countries other than the

United States. For example, the Web site could state that the

securities or services are not being offered in the United States or

to U.S. persons, or it could specify those jurisdictions (other than

the United States) in which the offer is being made;\21\ and

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\21\ The disclaimer would have to be meaningful. For example,

the disclaimer could state, ``This offering is intended only to be

available to residents of countries within the European Union.''

Because of the global reach of the Internet, a disclaimer that

simply states, ``The offer is not being made in any jurisdiction in

which the offer would or could be illegal,'' however, would not be

meaningful. In addition, if the disclaimer is not on the same screen

as the offering material, or is not on a screen that must be viewed

before a person can view the offering materials, it would not be

meaningful.

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The Web site offeror implements procedures that are

reasonably designed to guard against sales to U.S. persons in the

offshore offering. For example, the offeror could ascertain the

purchaser's residence by obtaining such information as mailing

addresses or telephone numbers (or area code) prior to the sale.

This measure will allow the offeror to avoid sending or delivering

securities, offering materials, services or products to a person at

a U.S. address or telephone number.

These procedures are not exclusive; other procedures that suffice

to guard against sales to U.S. persons also can be used to demonstrate

that the offer is not targeted at the United States. Regardless of the

precautions adopted, however, we would view solicitations that appear

by their content to be targeted at U.S. persons as made in the United

States. Examples of this type of solicitation include purportedly

offshore offers that emphasize the investor's ability to avoid U.S.

income taxes on the investments.\22\ We are concerned that the advice

that we provide to assist those who attempt to comply with both the

letter and spirit of the securities laws will be used by others as a

pretext to violate those laws. Sham offshore offerings or procedures,

or other schemes will not allow issuers or promoters to escape their

registration obligations under the U.S. securities laws.

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\22\ In our view, while a relevant factor, the fact that an

Internet offeror posts offering materials in English even though it

is based in a non-English speaking country will not, by itself,

demonstrate that the offer is targeted at the United States.

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C. Effect of Attempts by U.S. Persons to Evade Restrictions

We recognize that U.S. persons may respond falsely to residence

questions, disguise their country of residence by using non-resident

addresses, or use other devices, such as offshore nominees, in order to

participate in offshore offerings of securities or investment services.

Thus, even if the foreign market participant has taken measures

reasonably designed to guard against sales to U.S. persons, a U.S.

person nevertheless could circumvent those measures.

In our view, if a U.S. person purchases securities or investment

services notwithstanding adequate procedures reasonably designed to

prevent the purchase, we would not view the Internet offer after the

fact as having been targeted at the United

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States, absent indications that would put the issuer on notice that the

purchaser was a U.S. person. This information might include (but is not

limited to): receipt of payment drawn on a U.S. bank; provision of a

U.S. taxpayer identification or social security number; or, statements

by the purchaser indicating that, notwithstanding a foreign address, he

or she is a U.S. resident. Confronted with such information, we would

expect offerors to take steps to verify that the purchaser is not a

U.S. person before selling to that person.\23\ Additionally, if despite

its use of measures that appear to be reasonably designed to prevent

sales to U.S. persons, the offeror discovers that it has sold to U.S.

persons, it may need to evaluate whether other measures may be

necessary to provide reasonable assurance against future sales to U.S.

persons.

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\23\ These additional steps could include a request for further

evidence (e.g., a copy of a passport or driver's license).

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D. Third-Party Web Services

An issuer, underwriter or other type of offshore Internet offeror

may seek to have its offering materials posted on a third-party's Web

site. In that event, if the offeror uses a third-party Web service that

employs at least the same level of precautions against sales to U.S.

persons as would be adequate for the offshore Internet offeror to

employ, we would not view the third-party's Web site as an offer that

is targeted to the United States.\24\

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\24\ Governmental authorities or securities exchanges could post

issuer information that is required by law to be filed with them,

including prospectuses, on their Web sites without restriction.

Securities exchanges, however, should consider the U.S. registration

implications of their Web sites as a whole. See infra Section VII.B

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When an offeror, or those acting on its behalf, uses a third-

party's Web site to generate interest in the Internet offer, more

stringent precautions by the offeror than those outlined in Section

III.B. may be warranted. These precautions may include limiting access

to its Internet offering materials to persons who can demonstrate that

they are not U.S. persons. For example, additional precautions may be

called for when the Internet offeror:

Posts offering or solicitation material or otherwise

causes the offer to be listed on an investment-oriented Web site that

has a significant number of U.S. clients or subscribers, or where U.S.

investors could be expected to search for information about investment

opportunities or services; or

Arranges for direct or indirect hyperlinks from a third-

party investment-oriented page to its own Web page containing the

offering material.

IV. Additional Issues Under the Securities Act

Our Securities Act analysis assumes that the information posted on

a Web site would, were we to deem it to occur in the United States,

constitute an ``offer'' within the meaning of Section 5(c) of the

Securities Act and Regulation S, a ``public offering'' prohibited under

Section 4(2) of the Act, a ``general solicitation or general

advertising'' prohibited under Rule 502(c) of Regulation D,\25\ and a

``directed selling effort'' prohibited under Regulation S.\26\ The

focus of our analysis, then, is under what circumstances should we deem

offshore Internet offers to which U.S. persons can gain access not to

occur in the United States.

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\25\ Rule 502(c) under the Securities Act [17 CFR 240.502(c)].

\26\ Rule 902(c) [17 CFR 230.902(C)].

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A. Offshore Offerings by Foreign Issuers

1. Regulation S

When a foreign issuer is making an unregistered offshore Internet

offer and does not plan to sell securities in the United States as part

of the offering, it should implement the general measures outlined in

Section III.B. to avoid targeting the United States. Assuming that the

offering is made pursuant to Regulation S, the offering must comply

with all of the applicable requirements under that regulation,

including the requirement that all offers and sales be made in

``offshore transactions.''\27\

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\27\ Rule 902(h) and Rule 903 of Regulations S [17 CFR

230.902(h) and 230.903]. The issuer's or underwriter's use of an

Internet Web site to offer securities will not, by itself, prevent

bona fide offshore purchasers in a Regulation S offering from

reselling into the United States pursuant to registration or an

exemption, such as Rule 144A [17 CFR 230.144A], provided that: (1)

those purchasers are not part of the selling group; (2) those

purchasers are not affiliated with the issuer or any member of the

selling group; and (3) the issuer's or underwriter's use of the Web

site was not undertaken as part of an arrangement with, or on behalf

of, such offshore purchasers.

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2. U.S. Exempt Component

Foreign issuers commonly make offshore offerings concurrently with

private offerings to U.S. institutional buyers. An offering exempt

under Section 4(2) of the Securities Act may not involve ``any public

offering.'' Regulation D specifically prohibits the offer or sale of

securities through a ``general solicitation or general advertising.''

Publicly accessible Web site postings may not be used as a means to

locate investors to participate in a pending or imminent U.S. offering

relying on those provisions. If a Web site posting would be

inappropriate for a U.S. private placement, an issuer should not

attempt to accomplish the same result indirectly through the posting of

an offshore Internet offer.

In addition to implementing the type of precautionary measures

previously discussed, foreign issuers could implement other procedures

to prevent their offshore Internet offers from being used to solicit

participants for their U.S.-based exempt offerings, including:

The Internet offeror could allow unrestricted access to

its offshore Internet offering materials, but not permit persons

responding to the offshore Internet offering to participate in its

exempt U.S. offering, even if otherwise qualified to do so. In that

situation, the offeror would keep a record of all persons responding

over the Internet and all persons who otherwise indicate that they

are responding to the offshore Internet offering;\28\ or

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\28\ To identify those persons who are responding to the

Internet offer, the Web site could provide telephone numbers,

contact persons, or addresses that differ from those used in the

offeror's other, more traditional offering materials. Under an

approach suggested in staff no-action letters, the offeror could

communicate with U.S. persons on the list to determine whether they

are accredited investors with a view towards permitting their

participation in separate, future exempt U.S. offerings by the

issuer or, where the Web site offeror is an intermediary, other

issuers. See Staff no-action letters, Royce Exchange Fund (available

Aug. 28, 1996); Bateman Eichler (available Dec. 3, 1985); E.F.

Hutton & Co. (available Dec. 3, 1985); Woodtrails-Seattle (available

Aug. 9, 1982). Likewise, any investor solicited by the issuer or

underwriter prior to or independent of the Web site posting could

participate in the private offer, regardless of whether the investor

may have viewed the posted offshore offering materials.

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The Web site offeror could ensure that access to the

posted offering materials is limited to those viewers who first

provide their residence information and, in doing so, do not provide

information such as a U.S. area code or address that indicates that

they are a U.S. person.\29\ Thus, U.S. persons could obtain access

only by misrepresenting their residence information.\30\

\29\ This step could be accomplished in multiple ways. For

example, when a person reaches the Web site and then attempts to

move to a section that includes offering information, a screen could

ask for the required residence information. After the user enters

the information, the area code and address could be automatically

and immediately screened to eliminate further access to those who

match a U.S. area code or address. Alternately, the offeror could

require a password and not assign a password until it verifies that

address information, or it could block access by using technology

that recognizes the country from which the Web site is being

accessed.

\30\ Web site offerors must act in good faith to screen U.S.

persons from viewing offering information. A screening mechanism

that suggests ways of easy bypass would not be evidence of good

faith.

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We believe that it would not be advisable for us to dictate the use

of any one particular technology or screening method to protect against

general solicitation in these instances. Any less

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costly, less intrusive method that is equally or more effective than

those that we have suggested would be adequate as well.

In addition, the posted offering materials should relate only to

the offshore offering.\31\ The materials should contain only that

information (if any) concerning the private U.S. offering that is

required by foreign law to be provided to investors participating in

the offshore public offering.\32\

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\31\ A foreign issuer that wishes to use an Internet Web site to

conduct the concurrent private placement in the United States could

follow the general procedures developed in the domestic context for

private placements on the Internet. See, e.g., Staff no-action

letters, IPONET (available July 26, 1996); Lamp Technologies, Inc.

(available May 29, 1997). Under these procedures, the public offer

posted on the Web site may not provide a hyperlink or otherwise

alert the viewer to any Web site containing private placement

offering materials.

\32\ Rule 135c under the Securities Act [17 CFR 230.135c]

provides useful guidance on what limited information could be

included on the Web site under these circumstances.

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B. Offshore Offerings by U.S. Issuers

Our approach to the use of Web sites to post offshore securities

offerings distinguishes between domestic and foreign issuers.\33\ For

the following reasons, additional precautions are justified for Web

sites operated by domestic issuers purporting not to make a public

offering in the United States:

\33\ We use the term ``foreign issuer'' as it is defined in Rule

902(e) of Regulation S [17 CFR 230.902(e)]. See Securities Act

Release No. 7505.

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The substantial contacts that a U.S. issuer has with

the United States justifies our exercise of more extensive

regulatory jurisdiction over its securities-related activities;

There is a strong likelihood that securities of U.S.

issuers initially offered and sold offshore will enter the U.S.

trading markets; and

U.S. issuers and investors have a much greater

expectation that securities offerings by domestic issuers will be

subject to the U.S. securities laws.

Our experience with abusive practices under Regulation S indicates

that we should proceed cautiously when giving guidance to U.S. issuers

in the area of unregistered offshore offerings. As a result, we would

not consider a U.S. issuer using a Web site to make an unregistered

offer to have implemented reasonable measures to prevent sales to U.S.

persons unless, in addition to the general precautions discussed above

in Section III.B., the U.S. issuer implements password-type procedures

that are reasonably designed to ensure that only non-U.S. persons can

obtain access to the offer.\34\ Under this procedure, persons seeking

access to the Internet offer would have to demonstrate to the issuer or

intermediary that they are not U.S. persons before obtaining the

password for the site.\35\

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\34\ See, e.g., IPONET and Lamp Technologies, Inc., supra note

31. Our interpretation therefore would allow for the creation of

limited-access systems. Eventually, closed systems may develop that

target only non-U.S. persons and qualified U.S. investors.

\35\ See Securities Act Release No. 7392 at n.31 (Feb. 28, 1997)

[62 FR 9258] (issuer cannot accept at face value representations by

investors regarding their residence). See also IPONET, supra note

31(IPONET's activities were supervised by an entity that verified

information provided to IPONET by people who filled out IPONET's on-

line questionnaire. Information from the questionnaires was used to

determine whether respondents qualified as accredited investors and

therefore were eligible to obtain password to access password-

protected Web pages where IPONET posted private offerings).

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In the context of broader Securities Act reform, we have been

considering whether the current general solicitation and other offering

communications restrictions on issuers and other offering participants

should be modified to create greater flexibility.\36\ To the extent

that we reform those restrictions on offering communications in the

future, we also will consider the implications of those changes for

unregistered offshore Internet offerings.

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\36\ Securities Act Release No. 7314 (July 25, 1996) [61 FR

40044]; Securities Act Release No. 7187 (July 10, 1995) [60 FR

356545].

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C. Concurrent U.S. Registered Offering

A registered offering in the United States that takes place

concurrently with an unregistered offshore Internet offer presents

concerns because of the Securities Act's restrictions on making offers

prior to the filing of a registration statement or, in the case of

written or published offers, outside of the statutory prospectus.

Consistent with these requirements, therefore, premature posting of

offering information must be avoided. Existing Commission rules that

provide a safe harbor for announcements of anticipated offerings

provide guidance in this respect.\37\ The Commission is considering

whether to provide further guidance or to make further changes

concerning concurrent U.S. registered offerings and offshore Internet

offers in the context of broader Securities Act reforms.

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\37\ See, e.g., Rule 135 under the Securities Act [17 CFR

230.135].

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D. Underwriters

Just as an issuer must take reasonable steps to avoid offers of

unregistered securities in the United States, so too must persons

acting on behalf of the issuer, such as underwriters or distributors.

These persons, for purposes of the Securities Act, stand in the place

of the issuer.

Thus, regardless of whether the underwriter is foreign or domestic,

what constitutes measures reasonably designed to prevent sales to U.S.

persons will depend on the status of the issuer. For example, if the

issuer is domestic and precautionary measures would call for its Web

site containing offshore offering information to be password-protected,

so too should the information be protected on the underwriter's Web

site.\38\

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\38\ This, however, would not include bona fide research that

complies with the Commission's safe harbor rules for research

reports. See Rules 137-139 under the Securities Act [17 CFR 230.137-

230.139]. Cf. Exchange Act Rule 15a-6(a)(2) [17 CFR 240.15a-6(a)(2)]

(conditional exemption from U.S. broker-dealer registration for

foreign broker-dealers that furnish research reports to ``major

institutional investors'' as defined in the rule).

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V. Additional Issues Under the Investment Company Act

This portion of the release addresses certain issues that arise

under the Investment Company Act when a foreign fund (that is, an

investment company that is organized under the laws of a jurisdiction

other than the United States) makes an offshore Internet offer of its

securities. In general, as with other types of securities offerings, we

would not consider an Internet offer by a foreign fund to cause the

fund to be subject to regulation or registration under the Investment

Company Act if the foreign fund implements measures reasonably designed

to guard against sales to U.S. persons.

The issue raised by the use of the Internet is whether a foreign

fund's Internet offer that can be accessed by U.S. persons should be

considered a public offer in the United States.\39\ Consistent with our

position under the Securities Act, if a foreign fund implements

measures reasonably designed to guard against sales to U.S. persons, we

would not consider the foreign fund's Internet offer to be targeted to

U.S. persons, and therefore would not consider the Internet offer to

constitute a public offer in the United

[[Page 14811]]

States subjecting the foreign fund to regulation and registration under

the Investment Company Act.

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\39\ Section 7(d) of the Investment Company Act generally

prohibits a foreign fund from using U.S. jurisdictional means to

make a public offer of its securities in the United States or to

U.S. persons, unless the fund receives an order from the Commission

permitting it to register under the Investment Company Act. The

Commission may issue such an order only if it finds that it is

legally and practically feasible to enforce the provisions of the

Investment Company Act effectively against the foreign fund, and

that the issuance of the order is consistent with the public

interest and the protection of investors.

For purposes of Section V, references to offers and sales to

U.S. persons include offers or sales in the United States.

Similarly, references to offers or sales in the United States

include offers or sales to U.S. persons.

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An Internet offer by a foreign fund may arise in a number of

situations. For example, a foreign fund could conduct an Internet offer

that is targeted exclusively offshore. A foreign fund also could

conduct an offshore Internet offer in addition to a private U.S.

offer.\40\ We discuss these situations separately below. We also

address the use of the Internet by unregistered U.S. funds making

private offshore offers, and the use of other forms of Internet

marketing of investment company securities.

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\40\ In addition, a foreign fund also may use the Internet

exclusively to conduct a private U.S. offer. This release doe not

address the ability of a foreign fund to conduct a private U.S.

offer over the Internet, except to the extent that it is relevant to

the foreign fund's ability to simultaneously conduct an offshore

Internet offer. See infra note 45 and accompanying text. As

discussed above in Section I, the statements made in this release do

not alter the requirement that all offers and sales in the United

States must be pursuant to registration under the U.S. securities

laws or an applicable exemption.

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A. Internet Offers by a Foreign Fund

1. Offers Targeted Exclusively Offshore

When a foreign fund is making an unregistered offshore Internet

offer and does not intend to sell securities in the United States as

part of the offering, our general statements in Section III.B.

outlining the need for precautionary measures to avoid targeting the

United States apply here as well. We may view an Internet offer as

being targeted to U.S. persons, however, if the foreign fund is engaged

in activities, either as a part of or in addition to its Internet

offer, that are designed to attract U.S. persons to the Internet offer,

such as advertising the existence of the foreign fund's Web site in a

U.S. publication.

2. Foreign Funds Conducting Offshore and Private U.S. Offers

Next, we address offshore Internet offers by foreign funds that

also are conducting private U.S. offers.\41\ We would not consider a

foreign fund that is concurrently conducting both a private U.S. offer

and an offshore Internet offer to be making a public offer of its

securities in the United States if the foreign fund implements measures

reasonably designed to guard against public sales of its securities to

U.S. persons, and the Internet offer is not indirectly used as a

general solicitation for participants in the private U.S. offer. As

stated above, what constitutes adequate measures will depend on all of

the facts and circumstances. In addition to implementing the type of

precautionary measures discussed in Section III.B. (with one

modification noted below), a foreign fund could use any procedures

reasonably designed to guard against use of its Internet offer to

generally solicit participants in the U.S. private offer.\42\

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\41\ The staff previously took the position that under certain

circumstances a foreign fund that is conducting an offshore offer

also may make a private U.S. offer in reliance on the exclusion from

the definition of ``investment company'' in Section 3(c)(1) of the

Investment Company Act consistent with the public offering

prohibition contained in Section 7(d). See Staff no-action letter,

Touche Remnant & Co. (available Aug. 27, 1984) (``Touche Remnant'').

In Goodwin Procter, supra note 13, the staff similarly took the

position that under certain circumstances a foreign fund that is

conducting an offshore offer also may make a private U.S. offer in

reliance on the exclusion from the definition of ``investment

company'' in Section 3(c)(7) of the Investment Company Act

consistent with the public offering prohibition contained in Section

7(d). the staff also has stated that if U.S. persons become

shareholders of a foreign fund for reasons beyond the control of the

fund or persons acting on its behalf, the fund would not be required

to count those shareholders as U.S. persons for purposes of

determining whether the fund may rely on the exception from the

definition of ``investment company'' in Section 3(c)(1) of the

Investment Company Act. See Staff no-action letter, Investment Funds

Institute of Canada (available Mar. 4, 1996). The same position

applies to foreign funds relying on Section 3(c)(7) of the

Investment Company Act. See generally Goodwin Procter, supra note

13. We take the position that Touche Remnant is superseded to the

extent that it is inconsistent with these positions.

\42\ See notes 28-32 supra and accompanying text.

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If a foreign fund that is concurrently conducting a private U.S.

offer and an Internet offer uses a disclaimer that reflects the

existence of two separate offers and indicates that the Internet offer

is not being made in the United States, we would view this action as an

indication that the fund has taken measures reasonably designed to

guard against publicly selling its securities to U.S. persons. The

disclaimer could state, for example, that this offer (the offshore

Internet offer) is not being made in the United States (or identify the

jurisdictions in which the Internet offer is being made) and that the

offer and sale of securities in the United States is not permitted

except pursuant to an exemption from registration.

If, however, a foreign fund directly or indirectly provides any

additional information on its Web site about the types of persons to

whom offers and sales can be made pursuant to an exemption under U.S.

law, or provides guidance on how U.S. persons may obtain this or other

purchasing information, we would view this action as an indication that

the foreign fund is using its Internet offer to target the United

States, except to the extent that foreign law requires that the

information be disclosed.\43\ Moreover, if the foreign fund provides a

hyperlink, or otherwise directs U.S. persons, to another source that

provides information about the private offering, we would view this

action as an indication that the foreign fund is targeting the United

States. In our view, either of these actions could result in the

foreign fund making a public offer in the United States.

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\43\ Although Rule 135c by its terms applies only to Section 5

of the Securities Act, we would take a similar approach with respect

to the type of information that a foreign fund may, if required by

foreign law, provide on its Internet site about a U.S. private offer

without violating the public offering prohibition contained in

Section 7(d) of the Investment Company Act. See supra note 32 and

accompany text.

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A foreign fund also may be making a public offer in the United

States if it provides any other information about the private U.S.

offer on its Web site, except to the extent that foreign law requires

that the information be disclosed.\44\ If the foreign fund wishes to

provide information on its Web site relating to its private U.S. offer

(other than information required by foreign law), it generally may do

so without registering under the Investment Company Act if it adopts

and implements password-type procedures with respect to that

information.\45\

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\44\ An adviser to a foreign fund conducting an offshore

Internet offer that also sponsors a U.S.-registered investment

company with the same investment objectives and policies as the

foreign fund may provide information about, or direct the viewer to,

the registered U.S. offer without the Internet offer being

considered to be a public offer of the foreign fund's securities in

the United States.

\45\ See Lamp Technologies, Inc. and IPONET, supra note 31.

Prequalification and password-type procedures are intended to ensure

that only persons eligible to privately purchase the securities can

obtain access to a Web site used in connection with a private offer

and that the dissemination of information through the Internet site

does not constitute a ``general solicitation'' under Rule 502(c) of

Regulation D under the Securities Act. In addition to the procedures

discussed in Lamp Technologies, there may be other, equally

effective procedures designed to restrict access to information on

the Internet to those persons who are eligible to purchase

securities in a private U.S. offer.

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As with our position under the Securities Act, we are concerned

that our guidance with respect to the Investment Company Act may be

used by some foreign funds that are conducting Internet offers to

engage in activities that are part of a plan or scheme to make public

offers in the United States. None of our statements in this release is

intended to suggest that any foreign fund could do indirectly what it

could not lawfully do directly.\46\

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\46\ See Section 48(a) of the Investment Company Act.

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B. Offshore Offers by U.S. Funds

As previously noted, the Commission's position on the use of the

Internet for unregistered offshore offers generally distinguishes

between U.S.

[[Page 14812]]

and foreign issuers, based upon the Commission's greater interest in

regulating the conduct of U.S. issuers in the United States. As noted

in Section IV.B., we will not require a U.S. issuer making an offshore

offer over the Internet to register the offer under the Securities Act

if it uses procedures reasonably designed to ensure that only non-U.S.

persons may view the offer. We conclude that the same approach should

apply under the Investment Company Act to U.S. funds making offshore

Internet offers. Thus, we would not consider a U.S. fund making a

private offshore offer in reliance on one of the exclusions from the

definition of ``investment company'' in Section 3(c)(1) or Section

3(c)(7) of the Investment Company Act to be making a public offer in

the United States if the fund uses procedures, such as password-

protected web sites, reasonably designed to ensure the private nature

of the offer.\47\

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\47\ See supra notes 34-35 and accompanying text.

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As noted above, we are considering whether the current restrictions

on general solicitations in connection with private offers under the

Securities Act should be modified.\48\ In the event that we revise

current Securities Act restrictions on exempt private offers and

unregistered offshore offers, we anticipate that we would consider

parallel revisions under the Investment Company Act.

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\48\ See supra note 36 and accompanying text.

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C. Other Forms of Internet Marketing of Investment Company Securities

We analyze Internet offers made by or on behalf of a foreign fund

in generally the same manner as offers by other types of issuers.\49\

If a foreign fund or persons acting on its behalf seek to use a third-

party Web site to generate interest in an offshore offer, the

implementation of more stringent restrictions on the offshore Internet

offer may be necessary to ensure that the offer is not being directed

into the United States, including limiting access to the Internet

offering materials to persons who can demonstrate that they are not

U.S. persons.\50\

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\49\ See Section III.D., supra.

\50\ Id.

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VI. Offers of Advisory Services Under the Advisers Act

This portion of the release addresses issues that arise under the

Advisers Act when a foreign adviser (that is, an investment adviser

that is organized under the laws of a jurisdiction other than the

United States) offers its advisory services over the Internet. In

general, a foreign adviser may be able to rely on an exemption from

registration under the Advisers Act if it has fewer than fifteen U.S.

clients and implements measures reasonably designed to ensure that,

based on its Internet activities, the adviser is not holding itself out

as an investment adviser in the United States.\51\

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\51\ Section 203)a) of the Advisers Act generally prohibits any

investment adviser from using U.S. jurisdictional means in

connection with its business as an investment adviser, unless the

adviser is registered with the Commission, or is exempted or

excluded from the requirement to register. Section 203(b)(3) of the

Advisers Act provides for an exemption from registration for any

adviser who during the course of the preceding twelve months has had

fewer than fifteen clients and who neither holds itself out

generally to the public as an investment adviser nor acts as an

adviser to a U.S.-registered investment company or business

development company. The staff has taken the position that foreign

advisers are required to count only their U.S. clients for purposes

of determining whether they are exempt from registration under

Section 203(b)(3). See Protecting Investors: A Half Century of

Investment Company Regulation, at 223 n.6 (1992); Staff no-action

letter, Murray Johnstone Ltd. (available Oct. 7, 1994).

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The issue raised by a foreign investment adviser's use of the

Internet is whether and, if so, under what circumstances, the foreign

adviser may provide information about its advisory services over the

Internet without being considered to be holding itself out as an

investment adviser in the United States. We conclude that a foreign

adviser providing advisory services over the Internet generally would

be holding itself out as an investment adviser. Specifically, we have

stated that we generally will consider an adviser who uses a publicly

available electronic medium, such as the Internet, to provide

information about its services to be holding itself out to the public

as an adviser, and to not qualify for the exemption from registration

contained in

Section 203(b)(3) of the Advisers Act.\52\ If, however, the adviser

implements measures reasonably designed to guard against directing

information provided on the Internet about its advisory services to

U.S. persons, we would not consider the foreign adviser to be holding

itself out as an investment adviser in the United States for purposes

of Section 203(b)(3).

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\52\ See use of Electronic Media by Broker-Dealers, Transfer

Agents, and Investment Adviser for Delivery of Information,

Securities Act Release No. 7288 (May 9, 1996) at text accompanying

n. 32. But see Lamp Technologies, Inc., supra note 31.

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What constitutes measures reasonably designed to guard against an

adviser holding itself out as an investment adviser in the United

States will depend on all of the facts and circumstances. We generally

would consider an adviser to have implemented measures reasonably

designed to guard against holding itself out as an investment adviser

in the United States if:

The Web site includes a prominent disclaimer making it

clear to whom the site materials are (or are not) directed.\53\

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\53\ See supra note 21 and accompaying text.

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The adviser implements procedures reasonably designed

to guard against directing information about its advisory services

to U.S. persons (e.g., obtaining sufficient residency information

such as mailing addresses or telephone numbers prior to sending

further information), other than to its fourteen or fewer U.S.

clients.\54\

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\54\ See text following supra note 21.

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Other measures also may provide adequate assurance that a foreign

adviser is not holding itself out as an investment adviser in the

United States.

VII. Exchange Act Registration Issues

The Internet activities of broker-dealers and markets (including

exchanges) also raise issues under the Exchange Act. Foreign entities

that perform these functions should consider whether their Internet

activities would subject them to registration under the Exchange Act.

A. Broker-Dealer Activities

Broker-dealers must register with the Commission if they are

physically present in the United States, or if, regardless of their

location, they effect, induce, or attempt to induce securities

transactions with investors in the United States. The issue, therefore,

is whether the Commission would deem a broker-dealer's Web site to be

an attempt to induce securities transactions with U.S. persons. Broker-

dealer Web sites may offer market information and investment tools,

real-time or delayed quote information, market summaries, research,

portfolio management tools, and analytic programs. Some sites also

include information on commissions and other fees, branch office

locations, and instructions on how to contact the broker-dealer. In

essence, Web sites advertise the broker-dealers' services to potential

investors with the intent of attracting securities business.

In keeping with the general principles outlined above (Section

III.B.), the Commission will not consider a foreign broker-dealer's

advertising on an Internet Web site to constitute an attempt to induce

a securities transaction with U.S. persons if the foreign broker-dealer

takes measures reasonably designed to ensure that it does not effect

securities transactions with U.S. persons as a result of its Internet

activities.

Under our general principles, as applied in the broker-dealer

context, a

[[Page 14813]]

foreign broker-dealer generally would be considered to have taken

measures reasonably designed to ensure it does not effect securities

transactions with U.S. persons as a result of its Internet activities

if it:

Posts a prominent disclaimer on the Web site either

affirmatively delineating the countries in which the broker-dealer's

services are available, or stating that the services are not

available to U.S. persons; and

Refuses to provide brokerage services to any potential

customer that the broker-dealer has reason to believe is, or that

indicates that it is, a U.S. person, based on residence, mailing

address, payment method, or other grounds.

As a means to implement the latter procedure, the broker-dealer

should require potential customers to provide sufficient residence

information.

These procedures are not exclusive. Adoption of other equally or

more effective precautions can also suffice to demonstrate that the

broker-dealer does not effect securities transactions with U.S. persons

as a result of its Internet activities.

The Commission has exempted foreign broker-dealers that effect

transactions with U.S. customers from registering in the United States

if these customers initiated transactions with the foreign broker-

dealers outside of the United States without solicitation.

Specifically, Exchange Act Rule 15a-6 currently provides an exemption

from U.S. broker-dealer registration for foreign broker-dealers that

effect transactions in securities with or for persons that they have

not solicited.\55\ Foreign broker-dealers that solicit transactions

with U.S. persons, however, are required to register as broker-dealers

in the United States.

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\55\ Exchange Act Rule 15a-6(a)(1) [17 CFR 240.15a-6(a)(1)].

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Foreign broker-dealers that have Internet Web sites and that intend

to rely on Rule 15a-6's ``unsolicited'' exemption should ensure that

the ``unsolicited'' customer's transactions are not in fact solicited,

either directly or indirectly, through customers accessing their Web

sites.\56\ In particular, these broker-dealers could obtain, as a

precaution reasonably designed to prevent that result, affirmative

representations from potential U.S. customers that they deem

unsolicited that those customers have not previously accessed their Web

sites. Alternatively, a broker-dealer could maintain records that are

sufficiently detailed and verifiable to reliably determine that such

U.S. customers had not obtained access to its Web site.

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\56\ Because a securities firm's Web site itself typically is a

solicitation, orders routed through the Web site would not be

considered ``unsolicited.''

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B. Exchange Activities

Until recently, in order to obtain current market information

about, and to purchase or sell securities on, a foreign market, a U.S.

investor typically contacted a U.S. broker-dealer by telephone or

facsimile. Alternatively, the U.S. investor could directly contact a

foreign broker-dealer that is a member of the foreign market. Today,

however, the technology exists for investors to obtain real-time

information about trading on foreign markets from a number of different

sources, and to enter and execute orders on those markets

electronically from the United States. Many exchanges, for example,

offer Web sites through which they provide real-time quotes and other

market information, e-mail addresses for questions, general contact and

membership information (including the names and addresses of members),

and other investing tools.

The U.S. securities laws require exchanges to register with the

Commission if they (or any broker or dealer) ``make use of the mails or

any means or instrumentality of interstate commerce for the purpose of

using any facility of an exchange within or subject to the jurisdiction

of the United States to effect any transaction in a security, or to

report any such transaction.'' \57\ The Commission currently is

considering the question of under what circumstances a foreign market

that provides the ability in the United States for U.S. persons to

trade directly in the market must register as a U.S. exchange.\58\

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\57\ Section 5 of the Exchange Act, 15 U.S.C. 78e.

\58\ Exchange Act Release No. 38672 (May 23, 1997).

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At this time, however, the Commission will not apply the exchange

registration requirements to a foreign market that sponsors a Web site

generally advertising the foreign exchange, disseminating quotes

(including real-time quotes with counterparty identification), or

allowing orders to be directed to the market through its Web site, so

long as the exchange takes steps reasonably designed to prevent U.S.

persons from directing orders to the market through its Web site. In

our view, an exchange generally would be considered to have taken steps

reasonably designed to prevent U.S. persons from accessing the market

through its Web site if it:

Posts a disclaimer on the Web site affirmatively

stating either the countries in which the exchange's services are

directly available, or that the exchange's services are not directly

available to U.S. persons;

Requires potential members or direct participants in

the exchange to state their residence and mailing address;

Refuses to allow trading on the exchange through the

Web site by any person that the exchange has reason to believe, or

that indicates it, is a U.S. person; and

Refrains from making arrangements to provide U.S.

persons with access to the exchange over the Internet indirectly

through its members.\59\

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\59\ This last step would preclude an exchange from relying on

this release if it, for example, sets the terms under which exchange

members provide Internet access to the exchange, or makes

arrangements for U.S. persons to directly clear and settle trades

conducted on the exchange through the Internet. Foreign exchanges

that knowingly provide U.S. persons with access to their trading

facilities through the Internet would not be able to rely on this

interpretation, and may be required to register with the Commission.

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List of Subjects

17 CFR Parts 231, 241 and 276

Securities.

17 CFR Part 271

Investment companies, Securities.

Amendments to the Code of Federal Regulations

For the reasons set forth in the preamble, the Commission is

amending Title 17, Chapter II of the Code of Federal Regulations as

follows:

PART 231--INTERPRETATIVE RELEASES RELATING TO THE SECURITIES ACT OF

1933 AND GENERAL RULES AND REGULATIONS THEREUNDER

1. Part 231 is amended by adding Release No. 33-7516 and the

release date of March 23, 1998, to the list of interpretative releases.

PART 241--INTERPRETATIVE RELEASES RELATING TO THE SECURITIES

EXCHANGE ACT OF 1934 AND GENERAL RULES AND REGULATIONS THEREUNDER

2. Part 241 is amended by adding Release No. 34-39779 and the

release date of March 23, 1998, to the list of interpretative releases.

PART 271--INTERPRETATIVE RELEASES RELATING TO THE INVESTMENT

COMPANY ACT OF 1940 AND GENERAL RULES AND REGULATIONS THEREUNDER

3. Part 271 is amended by adding Release No. IC-23071 and the

release date of March 23, 1998, to the list of interpretative releases.

[[Page 14814]]

PART 276--INTERPRETATIVE RELEASES RELATING TO THE INVESTMENT

ADVISERS ACT OF 1940 AND GENERAL RULES AND REGULATIONS THEREUNDER

4. Part 276 is amended by adding Release No. IA-1710 and the

release date of March 23, 1998, to the list of interpretative releases.

By the Commission.

Dated: March 23, 1998.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98-8001 Filed 3-26-98; 8:45 am]

BILLING CODE 8010-01-P