If a new guideline is adopted, the Securities and Exchange Commission would advise foreign companies selling stock over the Internet to add a disclaimer saying Americans can't buy the securities, SEC commissioners said.
The SEC's interpretive guidance seeks to help foreign companies avoid running afoul of U.S. securities registration laws when they post offerings exclusively to non-U.S. purchasers over the Internet that can be read by Americans.
The guidelines could be approved later this month, said Douglas Scheidt, chief counsel for the SEC's investment-management division.
SEC Commissioner Laura Unger said that, while she will vote for the plan, it raises long-term concerns over whether U.S. securities laws can keep pace with technological advances.
"The convoluted reasoning of the guidance begs a much bigger question," Unger said at the SEC Speaks conference in Washington. "Why should this type of information on the Internet from other countries trigger any violation at all?"
The Internet, the worldwide computer network, is increasingly being used by companies for stock sales. Barry Barbash, the SEC's investment-management director, has said that the guidance also will apply to offshore fund companies promoting mutual funds on the Internet to non-U.S. consumers.
Unger described her concerns as "philosophical." Commissioner Isaac Hunt, like Unger, said he would vote for the guidance.
Brian Lane, the SEC's corporation finance director, cited an example to which the guidelines might apply: an Australian company with an Internet site that wants to sell stock only to Australians .
"This will tell them, 'Here are the things you could do that won't trip you up,' " he said.
The SEC will add additional guidance to foreign companies that want to make private placements of stock to U.S. purchasers but sell publicly only outside the United States, Lane said. The Australian company selling public stock only to Australians still might want to make a private placement in New York, he said.
American laws prohibit general solicitations or advertisements for private stock offerings. A foreign company making a private placement in the U.S. wouldn't be allowed to advertise its Web site offerings in an American newspaper and still remain exempt from U.S. securities laws, Scheidt said.
Former SEC Commissioner Steven Wallman cautioned that other countries have their own laws that apply to Internet offerings, and foreign companies shouldn't have to hire attorneys in each country.