Practice Group(s):
Public Finance
Website Disclosure for Municipal Issuers
Portland
Focus on Website Disclosure
Jennifer B. Córdova
Carol Juang McCoog
Gülgün Ugur Mersereau
Harvey W. Rogers
Ann L. Sherman
Seattle
Scott A. McJannet
Robert D. Starin
David O. Thompson
Cynthia M. Weed
Spokane/Coeur d’Alene
Kevin R. Connelly
Laura D. McAloon
Brian M. Werst
Many Washington municipalities post financial statements and other financial information on their
Web sites. Posting financial information provides a useful mechanism for communicating with
constituents. In doing so, federal securities laws and Securities and Exchange Commission
interpretations suggest that municipalities should observe a number of precautions.
The anti-fraud provisions of the federal securities laws clearly apply to information disclosed to
investors in a bond issuer’s required disclosure documents, such as financial statements and
continuing disclosure reports. These provisions bar the making of any untrue statement of a material
fact or the omission of any material fact necessary in order to make the statements made, in the light
of the circumstances under which they were made, not misleading in connection with the offer or sale
of securities.
More broadly, whenever a bond issuer speaks publicly to investors, the issuer has an obligation under
the anti-fraud laws to speak accurately and completely. In addition to disclosure in connection with
the issuance of bonds (i.e. official statements and ongoing disclosure filings), these laws apply to a
range of issuer statements such as issuer presentations to and conversations with bond ratings analysts,
and would include, for example, a letter sent to bond owners regarding budgeting, ratings or other
investor-relevant topics. As a corollary of this rule, issuers also have a duty to correct material
statements to the market that are later discovered to have been inaccurate.
Application of this doctrine to issuer Web sites is potentially far-reaching. Arguably, any information
that an issuer posts on its Web site can be expected to reach and influence investors. The more
relevant the information is to investors, the stronger this assumption. The Securities and Exchange
Commission has cautioned:
It is important for issuers, including municipal securities issuers, to keep in mind that the federal
securities laws apply in the same manner to the content of their Web sites as to any other statements
made by or attributable to them… Issuers are responsible for the accuracy of their statements that
reasonably can be expected to reach investors or the securities markets regardless of the medium
through which the statements are made, including the Internet1.
If a bond issuer includes financial statements or other information on its site that can be reasonably
expected to reach investors, it should consider taking additional precautions.
1
“Public Statements by Corporate Representatives,” Exchange Act Release No. 336504 Fed. Reg. 2468-01 (Jan. 20, 1984). Where a
statement is materially misleading, an issuer and any persons responsible for the statement would be liable under the antifraud
provisions of the federal securities laws. See, e.g., SEC v. Texas Gulf Sulphur Co., 401 F.2d 833 (2d Cir. 1968), Coates v. SEC, 394
U.S. 976 (1969).
Website Disclosure for Municipal Issuers
Posting Annual Financial Statements and Auditor Reports
 An issuer should assume that it is “speaking to the market” when it posts financial information
such as its annual financial statements on its Web site.
 Consider posting the statement and report within a separate “investor information” page on the
site. A separate section of the Web site may be more manageable than having investor information
scattered throughout the Web site.
 Annual financial statements and auditor’s reports are accurate only as of their date and quickly
become stale. Conspicuously display the date of the financial statement and report.
 Include a disclaimer2 that states that each document speaks only as of its date; describes any other
limitations on the information in the statement or report; limits responsibility for third-party
information, if any, included in the statement or report; and makes clear that the issuer does not
undertake to update the statement or report.
 Consider requiring that users acknowledge the date of statement and report and any disclaimer by
clicking an “I agree” button before accessing the information.
 Do not attach a more recent cover letter to the financial statement or report, to avoid any
implication that the letter “brings forward” the statement or report.
 Further segregate the current financial statement and report from any archival investor information
on the Web site.
 Establish a procedure for regularly reviewing information posted on the Web site.
 Reconcile other information on the Web site, to ensure consistency. Other information on the Web
site (including, for example, meeting minutes, marketing materials, or press releases) should be
reviewed regularly for consistency and to determine whether they include investor information.
 Ensure that the statement and report is posted in a .PDF or other format that is not susceptible to
manipulation by users.
 Ensure that the issuer’s contract with its auditor (if using a private firm) allows the auditor’s report
to be posted on the Web site.
2
Although a disclaimer is ineffective in shielding an issuer from the anti-fraud laws, and the Securities and Exchange Commission
has consistently warned that disclaimers are contrary to the policies underlying these laws, a disclaimer may be useful in establishing a
record of whether the issuer intends that information on its Web site reach investors. Issuers should add a general disclaimer to their
Web sites stating that information on the Web site is intended to provide information to residents or users, and not to potential
purchasers or current holders of the issuer’s bonds. The disclaimer should advise investors seeking information to contact their brokerdealer or to contact the Nationally Recognized Municipal Securities Information Repositories (NRMSIRs).
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Website Disclosure for Municipal Issuers
Posting Historical or Archival Reports
Posting historical or archival reports of interest to investors raises particular concerns. Historical or
archival reports are by their nature stale and hence potentially misleading. At a minimum:

Clearly segregate historical/archival information from other investor information.

Conspicuously date all posted information (whether historical or current).

Do not include current summaries or cover letters in the historical area of the site that could be
deemed to “bring forward” the historical information (that is, include no current material in the
historical area).

Consider requiring that users acknowledge the date of posted information by clicking an “I agree”
button before accessing the information.

Establish a process for regularly reviewing material in both the current and historical areas.
Material in the current area should be subject to more frequent review. Promptly remove or update
all material in the current area that is potentially stale.

Ensure that information is posted in a format that is not susceptible to manipulation by users.
Links to and from Official Statements and Third-Party Sites
The use of links between an issuer’s Web site, its bond offering documents and third-party sites raises
the following concern: that linked information may be considered to be public statements attributable
to the issuer.
 Official Statements. Recognize that any hyperlinks embedded in an official statement (or other
required disclosure) will be deemed to be adopted by the issuer. Accordingly, embedded
hyperlinks generally should not be included in these documents. The issuer’s Web site address can
be included in its official statement, but should be disabled and should be accompanied by a
statement that the Web site address is provided as a textual reference only for convenience in
contacting the issuer. We include disclaimer language as a footnote whenever an issuer includes its
Web site information in an official statement.
 Web site. The issuer should be very cautious about including third-party links on its Web site. To
avoid the implication that the issuer has adopted the information on the third-party sites in its
statements to investors, the following precautions should be observed:
o Hyperlinks within any investor information section of the issuer site should be added only if
necessary, and then with extreme care regarding presentation.
o Information on a third-party Web site should not be framed or inlined (or presented in any other
manner that suggests that the third-party Web site is part of the site).
o Visitors leaving the issuer’s site to visit a hyperlinked site should be presented with an
intermediate screen that clearly and prominently indicates that the visitor is leaving the issuer’s
Web site and that the information subsequently viewed is not the issuer’s.
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Website Disclosure for Municipal Issuers
o The intermediate screen should include a clear and prominent disclaimer of responsibility for,
adoption or endorsement of, the information.
o If hyperlinks are included, they should be presented as a group, without distinction. They
should represent a fair sampling of the information available, rather than a selective listing of
particular sites (i.e., if links to rating agencies are provided, all the rating agencies links should
be included). The layout of hyperlinks should not distinguish between hyperlinks in terms of
prominence, size, color, type font or location.
Several entities have established separate investor relations pages on their Web sites, complete with
disclaimers and careful presentation to minimize securities law risks.
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