Last Friday, Dave blogged about the SEC’s new e-delivery rulemaking proposal, which would permit, but not require, covered entities to use e-delivery as the default method of delivery for covered information under specified conditions. This Morgan Lewis alert goes into detail on what the proposed Regulation E-Delivery would mean for “covered entities.”

• “Covered entities” are “virtually every entity with SEC-mandated delivery obligations,” including public companies.
• “Covered information” is “information required to be delivered under the Securities Act, Exchange Act, Investment Company Act, Advisers Act, Trust Indenture Act, or other federal securities laws,” including “prospectuses, proxy statements, annual reports, shareholder reports, trade confirmations, Form CRS, privacy notices, investment adviser brochures, and tender offer materials.”

Two permissible methods of delivery include direct delivery and a statement of availability.

For materials that do not contain personal financial information (PFI), covered entities would be permitted to deliver the materials directly to an electronic address, such as via email attachments, documents embedded in emails, or a similar direct electronic transmission.

Reg E-Delivery generally would disallow direct email delivery for materials containing PFI. Instead, covered entities would be permitted to send a statement notifying recipients that materials are available through a secure website after completion of a process reasonably designed to protect personal financial information (e.g., password authentication). This approach also could be used for materials that do not contain PFI [. . .]

Covered entities generally would be required to:

– provide prominent disclosure regarding electronic delivery;
– permit recipients to opt out at any time;
– provide paper copies upon request free of charge;
– permit recipients to update their electronic address without charge;
– maintain written procedures to identify and remediate failed electronic deliveries;
– maintain website availability standards for electronically delivered materials; and
– comply with specified content, timing, and formatting requirements for electronic communications.

In the next blog, I’ll share specifics regarding the delivery of proxy materials and prospectuses.

– Meredith Ervine