The Securities and Exchange Commission is considering a proposal to extend securities fraud liability to issuers whose Web sites contain hyperlinks to analysts’ Web sites that contain false or misleading statements. Does this “linkage liability” constitute Big Brother going too far?

The new proposal, which will take the form of an interpretative release, will also likely address the electronic delivery of disclosure documents and online securities offerings, according to P.J. Himmelfarb, special counsel in the Office of the Chief Counsel to the SEC’s Division of Corporation Finance. Himmelfarb, speaking at a Jan. 13 American Law Institute-American Bar Association conference on broker-dealer regulation, said the release would be issued in “mid-February.”

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