[12848]
November 8, 2000
TO: TECHNOLOGY ADVISORY COMMITTEE No. 2-00
RE: E-SIGN LEGISLATION: SUMMARY AND ANALYSIS
On June 30, 2000, President Clinton signed the Electronic Signatures in Global and
National Commerce Act (“E-SIGN”).1 As enacted, E-SIGN gives legal recognition and effect to
electronic signatures, contracts and records, and empowers the use of online contracts and
provision of notices. E-SIGN contains extensive consumer consent provisions, special records
retention requirements, and certain preemption provisions that limit states’ ability to supersede
the enacted legislation.
Of particular interest to the mutual fund industry is the exemptive authority given to
federal agencies allowing them to unconditionally exempt specified categories or types of
records from the consumer consent provisions. Most notably, the bill directs the Securities and
Exchange Commission to use this authority to issue a regulation or order that effectively allows
mutual funds to provide prospective investors with an electronic fund prospectus at or before
the time they access electronic sales literature without first obtaining investor consent to the
electronic format of the prospectus. Accordingly, the SEC adopted, as an interim final rule,
Rule 160 under the Securities Act of 1933, which enables funds to continue the practice,
permitted under SEC’s interpretive releases, of using hyperlinks on their websites to give
prospective investors simultaneous access to both sales literature and the fund’s prospectus.
The E-SIGN legislation and SEC Rule 160 became effective October 1, 2000, except for
certain E-SIGN provisions affecting the use of electronic records to satisfy records retention
requirements, which will not become effective until March 1, 2001.
A comprehensive summary and analysis of the key provisions of the E-SIGN legislation,
prepared by outside counsel, is attached, along with a copy of the final legislation and SEC
Rule 160.
Barry E. Simmons
Associate Counsel
Attachments (in .pdf format)
1 Pub. L. No. 106-229 (June 30, 2000).