execution services, the doctrine of suitability does not apply. It would also appear that when a customer disseminates information from a firm’s website and subsequently purchases shares in the applicable corporation, the firm supplying the information is not liable under the suitability obligation, because the information is not customer specific. A gray area, however, is when a customer is sent information specifically tailored to his/her requests or history on the Internet. One of the participants in a “Roundtable” discussion hosted by the SEC suggested “the benchmark for suitability should be whether a customer reasonably believes that the information sent to him took into account his ‘personal circumstances.’” Currently, the Commission is taking a flexible view of the suitability obligation and its application online, and will continue to revise its policy as technology makes it necessary.Fourth, there is the question of privacy concerns online. How does the online brokerage firm ensure the privacy of investor information? In a recent survey of Internet users, the Georgia Institute of Technology found that “more than 87 percent of Internet users were either somewhat of very concerned about their personal privacy while on-line.” Many people feel that online registration forms requiring personal information aren’t worth the risk, because there is frequently no indication of how the information will be used. One piece of legislation however, has attempted to regulate the sharing of information, both on-line and off. The Gramm-Leach-Briley Act provides that a firm must notify a customer before disclosing nonpublic personal information, and that the customer has the opportunity to opt out of such disclosure. With the development of technology at its current pace, however, increased vigilance may be necessary to ensure investor’s privacy.Also present is the is...
