SEC Issues No-Action Letter on Internet-Based ‘Road Shows’


The Securities and Exchange Commission has issued a “no-action” letter relating to a provider of electronic-based “road shows.” The SEC stated in the letter, issued on January 29, 2013, that such presentations to retail investors would not trigger an enforcement action against the road show provider, the issuer, or the municipal underwriter as long as the road shows are conducted in accordance with certain practices.

Road shows are presentations by issuers of municipal securities, in coordination with the underwriters of those securities. The presentations are designed to provide information to prospective investors relating to the underlying credit and the nature of the securities being offered. Historically, such road shows were conducted in person. The advent of the electronic age now allows them to be conducted over the Internet.

The use of an electronic road show concerning a municipal securities offering raises a question about whether the presentation is part of the official statement. If it is deemed part of the official statement, it raises issues of compliance for underwriters. Internet road shows also raise issues of compliance with the anti-fraud provisions of securities law.

In an effort to address the concerns, Internet road shows should:

  • Not contain information that conflicts with the information in the most current official statement
  • Provide written materials that include a legend informing the prospective investor that the issuer of the municipal securities has prepared preliminary and/or final official statements; the materials must also advise the investor to read the most current official statement before making an investment decision
  • Include an additional statement at the beginning that prospective retail investors should read the most current official statement when making an investment decision; a similar message should be displayed randomly throughout the presentation
  • Include a PDF of the most current preliminary or final official statement that could be downloaded and printed
  • Provide a link to the official statements on the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access so that retail investors would have easy access to all official statements
  • Only permit the prospective retail investor to view the road show in a serial fashion, rather than permitting the investor to skip ahead and receive information out of its proper context
  • Be retained for three years after the completion of the transaction in a format that meets the requirements of Exchange Act Rule 17a-4

For more information, please contact Bradley D. Patterson at 801.531.3033 or, Randall J. Towers at 215.864.8522 or, or any other member of Ballard Spahr’s Public Finance Department.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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