The SEC has outlined steps fund companies and corporations can take to reduce their chances of being sued by regulators if a company provides a hyperlink from its own corporate website to that of a third party whose website contains inaccurate or incomplete information.

The SEC, in assessing potential liability, will check whether a fund company that uses a hyperlink to another website has endorsed or approved the information on that third-party website, according to a new SEC directive. SEC lawyers and examiners will consider the risk of investor confusion about the identity of the website they are looking at, how the hyperlinked information is presented and the context of the hyperlink in assessing whether one website effectively is adopting the content of another.

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