Blue sky in deep cyberspace: New internet research resources for state securities law practice

Business Lawyer

Volumn 52, Issue 1, 1996, Pages 379-389

  Cornaby, Mary ^a  

^a NONE

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EID: 21744435576     PISSN: 00076899     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (78)

1. 1 LOUIS LOSS &JOEL SELIGMAN, SECURITIES REGULATION 190 (3d ed. 1989).
2. LOUIS LOSS & EDWARD M. COWETT, BLUE SKY LAW 90 (1958).
3. Even the passage of the new National Securities Markets Improvement Act of 1996, Pub. L. No. 104-290, 110 Stat. 3416 ( 1996), does not diminish the need for significant state securities research. Although the SEC will regulate securities and mutual funds listed on the national exchanges (as well as large investment advisors), states will have responsibility for smaller issues and smaller portfolio investment advisors, while retaining their authority to take fraudulent conduct enforcement actions.
4. "The securities researcher should be aware of the delay that always exists between an event and its coverage in a topical service or reporter. The interval seems to be approximately four weeks before the Federal Securities Law Reporter (CCH) includes a proposed or final rule." Kay Moller Todd, Securities Regulation, in SPECIALIZED LEGAL RESEARCH § 1.4.1, at 1-10 (Leah F. Chanin ed., 1995).
5. The Blue Sky Law Reporter is a looseleaf service. Looseleaf services historically have been the most current and comprehensive source for state administrative materials. See CHRISTINA KUNZ ET AL., THE PROCESS OF LEGAL RESEARCH 303-04 (4th ed. 1996). Even the Securities Assistant Series, which translates the benefits of the looseleaf service onto a CD set, still has the same currency delays.
6. The orders referred to infra note 8 were also checked in the Blue Sky Reporter as of June 7, 1996. Only five of the orders were located: Alaska, Connecticut, Indiana, Texas, and West Virginia.
7. While the Securities Regulation and Law Report makes reference to all orders cited infra note 8, it provides none in full-text and there are no printed references other than the order number. BNA does provide a search service which will send copies of these orders for varying prices.
8. As of June 7, 1996, LEXIS, according to the index in its STATES library', lists the codes and pending legislation and cases from the court of last resort for all 50 states. The administrative codes, however, appear for only 22 of the 50 states. The administrative register updates appear only for five jurisdictions. The attorneys general's opinions are listed for 48 states. States' regulatory agency securities decisions appear for 29 jurisdictions. In summary, the coverage is spotty: as an example, in Colorado, one cannot obtain the administrative code, but one can obtain securities rulings. In Alaska, one has access to the administrative code, but not agency decisions. In 45 of the jurisdictions, one cannot obtain timely updating in full-text on administrative codes or regulations, although there is a regulation tracking service available for all 50 states which offers updates in summary form. As of June 7, 1996, WESTLAW's coverage is equally a patchwork. WESTLAW contains only 14 jurisdictions' administrative codes. Administrative register full-text updates only appear for three jurisdictions, although WESTLAW offers the same regulation tracking as LEXIS, in summary form, for all 50 states. Securities administrative decisions for 23 states are available.
9. As an example, currently there are 23 states which have within the past 18 months adopted orders, rules, policies, or no-action letters to address regulatory issues arising from issuers placing offerings of securities on the Internet. See Alexander C. Gavis, The Offering and Distribution of Securities in Cyberspace: A Survey of Review of Regulatory and Industry Initiatives, 52 BUS. LAW. 317 (1996) (Alaska, Arkansas, Connecticut, Idaho, Indiana, Iowa, Kansas, Maryland, Michigan, Mississippi, Montana, Nebraska, New Jersey, North Dakota, Pennsylvania, South Carolina, South Dakota, Texas, Utah, Vermont, Washington, West Virginia, and Wisconsin). Of those states, only two orders, those in Texas and Utah, appeared on the regulation tracking database on both LEXIS and WESTLAW. None of the orders appear in any other database on either service.
10. One of the difficulties that both LEXIS and WESTLAW experience which might explain some of the sparseness of coverage is that, unlike the federal government, many states claim a copyright interest in their materials. The State of Maryland's Division of State Documents has compiled a survey of the availability of all 50 states' administrative codes online, which was updated in 1995. As of August 1995, 20 states responded that they retained the copyright in their state administrative materials and were not providing a private publisher an exclusive or nonexclusive right to publish those materials online without significant royalty and/or licensing fees. Administrative Codes & Registers in Electronic Form: 1994-95 State and Federal Survey (on file with The Business Lawyer, University of Maryland School of Law and available from Gary R. Hoffman, Director, Pa. Code/Bulletin, 641 Main Capitol Bldg., Harrisburg, PA 17120-0033, Tel: (717) 783-1530).
11. "The essential reason for teaching and learning about the Internet is that it is a valuable communications and research tool.... Text and images stored on Internet connected computers and transmitted through Internet connections give the Internet the potential for becoming a distributed world-wide library." DIANE KOVACS, THE INTERNET TRAINER'S GUIDE 15 (1995).
12. A commentator noted: In the world of computing, the Internet is at least as successful as the interstate [highway] system. Both have been overwhelmed by their success, and everyday carry traffic far beyond what their designers dreamt. Each regularly inspires complaints of traffic jams, inadequate routes, shortsighted planning, and inadequate maintenance. Yet even these complaints reflect the phenomenal popularity of what was an uncertain experiment only a few years ago.
13. CLIFFORD STOLL, THE CUCKOO'S EGG: TRACKING A SPY THROUGH THE MAZE OF COMPUTER ESPIONAGE 60 (1989).
14. LISTSERV is a commercial mailing list manager, marketed by L-Soft International, and ported to several different computer operating systems. The name "listserv" has now become synonymous with "mailing list manager" or "mail server, " although there are other commercial products, like Majordomo, that perform the same function. A mailing list manager, or mail server, is a program that receives incoming e-mail messages and automatically transmits copies to every member of the list. BRYAN PFAFFENBERGER, QUE'S COMPUTER & INTERNET DICTIONARY 297, 311-12 (6th ed. 1995).
15. A "listserv" or electronic discussion group or list is, in many cases, an online subscription discussion in which the subscribers can take part in moderated or in moderated ongoing conversations with the subscription group by sending e-mail messages. The value is not only in the interaction, but also in the electronically stored archives of the lists. Most research and teaching oriented listservs are archived in some way. These archives are in themselves valuable full-text databases. The subscription instructions for two listservs discussing federal securities law issues are: BIZLAW-L (mail to: , and in the body of the message type "subscribe BIZLAW-L "), which focuses on academic aspects of business organizations, securities, and related scholarship and FEDSEC (mail to: , and in the body of the message type "subscribe FEDSEC "), which is a discussion list concentrating on federal securities regulation.
16. The author has composed a bibliography entitled Securities Law Research Material on the Internet, Presentation at American Bar Association Business Law Section Annual Meeting (Aug. 5, 1996) (on file with The Business Lawyer, University of Maryland School of Law).
17. Genie Tyburski, a librarian with Ballard, Spahr, Andrews and Ingersoll in Philadelphia, also has produced a short, entertaining guide to doing federal securities research on the Internet in her article Securities Law on the World Wide Web (last modified June 18, 1996) .
18. Federal securities sites presently worth examining include: CorpFiNet, Directory of Securities Law Resources (visited Sept. 23, 1996) (very complete listings of legislation, rules, court decisions, and articles related to securities law, as well extensive financial site indexing).
19. U.S. Securities and Exchange Commission, U.S. Securities and Exchange Commission (last modified Sept. 9, 1996) (includes policy statements, recent regulatory text, and information for both proposed and adopted regulations and full-text hearing transcripts).
20. U.S. Securities and Exchange Commission, U.S. SEC EDGAR Database of Corporate Information (last modified Aug. 6, 1996) (contains the full text of the system; electronic filings can be searched online).
21. Villanova Center for Information and Policy, The Federal Web Locator (last modified Sept. 9, 1996) (the most complete source for finding federal government agencies on the Web).
22. U.S. Government Printing Office, GPO Access (last modified Sept. 3, 1996) (full-text, up-to-date U.S. Code, federal bills for the last two sessions of Congress, the Regulatory Agenda, and Federal Register, full-text searching).
23. University of Cincinnati College of Law, Center for Corporate Law, Center for Corporate Law (visited Sept. 9, 1996) (text of federal securities acts, regulations, rules, and forms).
24. What one needs in order to access the Internet efficiently are: an Internet access provider that offers Web capability at a flat charge rather than by the hour and will offer a toll-free number or local number access; a computer with sufficient RAM (random access memory) to handle the Web protocol (at least 8 megabytes is recommended) and a 256-color video card; and a modem able to transmit information at a minimum of a 14.4 kilobaud data rate.
25. See generally M. ETHAN KATSH, THE ELECTRONIC MEDIA AND THE TRANSFORMATION OF LAW 42-48 (1989).
26. KUNZ, supra note 4, at 30-31.
27. Id. at 38.
28. A "search tool" is sometimes also called a "search engine" (although the two terms are not synonymous), and allows the searcher to type in terms for which he or she wishes to search. The two oldest search tool programs, "Archie" for searching FTP (file transfer protocol) sites and "Veronica" for searching gopher sites, dealt only with file names, directory names, and menu items. They did not search text inside the documents.
29. See Mark butler, How To Use the Internet 126-30 (1994).
30. A URL is a specific Web address for every site and every document on the Internet. This address can be used from any Web browser (for example, Netscape, Netcruiser, LYNX) on the market. In the same way as the address on an envelope tells the post office where to deliver the letter, the Web address tells a computer where a particular site a searcher wishes to visit is located and where the information on that site can be found. All one has to do is get the address right. This Article assumes some familiarity with Internet searching. An excellent, if somewhat negatively titled, beginning guide for those unfamiliar with searching the Internet is JOHN R. LEVINE ET AL., THE INTERNET FOR DUMMIES (3d ed. 1995).
31. A recent evaluation of a number of search tools on the Web examined Lycos, one of the oldest and largest of Web search tools (or engines) against newer competitors. The Lycos database is not based on the full text of each page. Rather, it creates abstracts of pages based mainly on headers, titles, links, and the first few words of key paragraphs.... One result of this design is that the engine doesn't do well on searches for short references buried within documents.
32. Gus Venditto, Search Engine Showdown: IW Labs Test Seven Internet Search Tools, INTERNET WORLD, May 1996, at 79, 84.
33. TOM SAVOLA Et AL., USING HTML 463 (2d ed. 1996).
34. D. Scott Brandt, Evaluating Information on the Internet, COMPUTERS IN LIBR., May 1996, at 44, 45.
35. Alta Vista, Alta Vista (visited Sept. 9, 1996) .
36. Boolean searching is derived from Boolean algebra, a type of mathematics named after its inventor, George Boole, and used by computers. Boolean searching of law originated with the advent of LEXIS. You must specify the exact form of the words to be searched, and the words' exact mathematical relationship to each other.
37. Lynn Foster, Electronic Legal Research, Access to the Law, and Citation Form for Case Law: Comparison, Contrasts, and Suggestions for Arkansas Practitioners, 16 U. ARK. LITTLE ROCK L.J. 233, 238-39 (1994).
38. Advanced Boolean searching on Alta Vista includes the ability to: designate that a particular term must be present or that it must be absent; use the root form of a word; field searching: title, URL, links, host, anchor, applet, image and text; recognize connectors such as and, or, not, and near; use parentheses with terms or phrases to vary search order and limit retrieval by date.
39. See Greg R. Notess, Searching the Web with Alta Vista, DATABASE, June-July 1996, at 86, 88.
40. A reviewer noted: If its claim of more than 21 million fully indexed pages is accurate, Alta Vista unquestionably wins bragging rights as the largest of the Web-search databases. Our tests revealed Alta Vista to be as fast as its founders had hoped it would be.... [W]e found Alta Vista's search results to be consistently more comprehensive than any of the other sites'.
41. Venditto, supra note 21, at 81.
42. FindLaw, FindLaw (visited Sept. 8, 1996) .
43. FindLaw, Law Crawler(visited Sept. 9, 1996) .
44. The project was undertaken in conjunction with Blue Sky Net, a listserv devoted to the discussion of state securities issues and the exchange of current information. Blue Sky Net is housed at the University of Maryland School of Law and co-moderated by Professor Mark Sargent, Fred Bunker Davis, and Charles Braisted. Subscription instructions are as follows: BLUE SKY (mail to: , and in the body of the message type "subscribe BLUESKY ").
45. University of Maryland School of Law, Thurgood Marshall Law Library, Blue Sky Law Securities Regulation and Research Page (last modified Sept. 16, 1996) .
46. University of Maryland School of Law, Thurgood Marshall Law Library, Blue Sky State Law Agencies and Decision Table (last modified Sept. 16, 1996) .
47. Mark A. Sargent, State Treatment of LLC Interests as Securities (last modified Sept. 12, 1996) .
48. Securities Registration Depository, Securities Registration Depository (visited Sept. 9, 1996) . The Securities Registration Depository recently has been privatized, and while the site was not accepting registrations as of the date this site was visited, comments are being solicited at the site. The site is worth visiting to ascertain the future of this valuable resource.
49. Utah Division of Securities, Forms, Rules, Statutes, Opinions, Press Releases, and Fee Schedule (last modified May 1, 1996) .
50. A hypertext link involves adding links to words or phrases. When selected, these links jump to associated text in the same document or in another document altogether. As an example, one can click on an unfamiliar term and jump to its definition. A Web browser, whether Netscape or another browser, recognizes this link. PFAFFENBERGER, supra note 12, at 248.
51. University of Maryland School of Law, Thurgood Marshall Law Library, Conference Report (H. Rep. 104-864) Sept. 28, 1996 (National Securities Markets Improvement Act of1996) (visited Oct. 16, 1996) .
52. University of Maryland School of Law, Thurgood Marshall Law Library, Blue Sky Law Securities Regulation and Research Page (last modified Sept. 16, 1996) .
53. As well as the subscription instructions for Blue Sky Net listed supra note 28, the Blue Sky Law Securities Regulation and Research Page, (last modified Sept. 16, 1996) , also includes subscription instructions to LLC-LNET, an electronic list discussion group devoted to state treatment of limited liability company issues.
54. National Conference of Commissioners on Uniform State Laws, Uniform Securities Act (1956) with 1958 Amendments (visited Sept. 30, 1996) .
55. National Conference of Commissioners on Uniform State Laws, Uniform Securities Act (1985) with 1988 Amendments (visited Sept. 9, 1996) .
56. New additions planned include a table of those states that have adopted orders regulating Internet securities offerings which should be in place at the time of this Article's publication.
57. See supra note 26.
58. FindLaw, Main Index: Legal Subject Index: Securities Law (visited Sept. 9, 1996) .
59. Washburn University School of Law, Washlaw WEB: StateLaw: State & Local Government-Executive, Legislative, and Judicial Information (last modified Sept. 4, 1996) .
60. E-mail from Lloyd Herrera, Washburn University Law Library to Mary Cornaby, University of Maryland School of Law, Thurgood Marshall Law Library (Sept. 20, 1996) (on file with The Business Lawyer, University of Maryland School of Law).
61. See supra note 28.
62. This author had the experience of checking the status of Tennessee's new limited liability company act in the fall of 1995. WESTLAW's codification citation differed from LEXIS's codification citation significantly. Neither citation was correct. Accurate citation was obtained through the Tennessee legislature's Internet gopher server. A gopher server is a text-only, searchable Internet site, predating the Web. PFAFFENBERGER, supra note 12, at 221.
63. This problem certainly is not unique to the Internet. Experienced online researchers have known for a number of years that neither LEXIS nor WESTLAW has complete coverage of articles within the journal issues on their systems.
64. See MORRIS L. COHEN ET AL., FINDING THE LAW 374 (1989).
65. Irwin Gross, Researching Software Copyrightability: A Practical Guide, 10 SANTA CLARA COMPUTER & HIGH TECH. L.J. 69, 81 (1994).
66. Larry Aronson, HTML Manual of Style 42 (1994).
67. Id.
68. MARC I. STEINBERG, CORPORATE AND SECURITIES MALPRACTICE 120 (1992).
69. 867 F. Supp. 369 (E.D. Va. 1994), rev'd, 74 F.3d 514 (4th Cir. 1996). While the district court's decision was later reversed in that the Fourth Circuit found the defendant's lawyer had ascertained the correct standard, McNamara, 74 F.3d at 515, the McNamara case is noteworthy in the trial court's insistence that lawyers update their research by the latest technological means available.
70. Id. at 375-76.
71. Id. at 375 n.3.
72. Id. at 376.
73. 67 F.3d 605 (7th Cir. 1995).
74. Id. at 610.
75. Id.
76. Noel D. Humphreys, Online Searches As Normal Standard of Care, PA. LAW., Mar./Apr. 1996, at 42.
77. Whirlpool Fin. Corp., 67 F.3d at 610.
78. The Internet has become a recognized source for securities transactions due diligence searching. See ROBERT J. HAFT & BARRY J. HAFT, DUE DILIGENCE IN SECURITIES TRANSACTIONS 2-28 (1996).