The Securities and Exchange Commission broadened its rules Thursday so that publicly traded companies could use the Internet to disclose information to investors.
The rules complement the agency's efforts to make more public companies file regulatory reports to its own electronic data gathering system, known as Edgar.
The SEC said companies could send prospectuses and other materials to investors, by way of the Internet, as long as investors are notified and say they want the information.
Investors must also send a return receipt by e-mail confirming they have downloaded the material on their computer, the agency said.
Paper filings will still be required and investors who want them will continue to have access to those files, the SEC said.
SEC Chairman Arthur Levitt Jr., who inaugurated a World Wide Web site last week to make SEC filings and other reports available to investors quickly, said the agency's goal is to make information more "user friendly."
He said it was all part of his goal of promoting the Internet as a way to reach investors more quickly and for companies to cut down on paperwork.
SEC Commissioner Steve Wallman said using electronics to communicate with investors, while "all voluntary," would allow the public to benefit greatly from new technology. However, he added that the SEC has turned down industry proposals to create a World Wide Web site for investor communications.
"I don't think the world is quite there, yet," he said.
Bill McClucas, SEC enforcement chief, served warning that the agency has the means to catch people bent on hoodwinking investors.
He said the SEC reviews certain on-line services and scans communications to identify securities fraud in the making. His staff is on the lookout for Internet users acting as unregistered broker-dealers touting phony securities.