Legislation introduced last month in Congress to provide the Securities and Exchange Commission with additional authority to protect investors from violations of the securities laws contains a section on Internet service providers.
Section 508 of the measure, H.R.3817, holds that “Any Internet service provider that, on or through a system or network controlled or operated by the Internet service provider, transmits, routes, provides connections for, or stores any material containing any misrepresentation of the kind prohibited in paragraph (1) shall be liable for any damages caused thereby …”
According to the text of the legislation, an Internet service provider would only be held liable if it had “actual knowledge that the material contains a misrepresentation of the kind prohibited in paragraph” or “is aware of facts or circumstances from which it is apparent that the material contains a misrepresentation” and fails to act quickly to remove or disable access to the material.
Rep. Paul Kanjorski, D-Pa., filed the bill, which was reportedly approved by the House Financial Services Committee on Wednesday by a 41 to 28 vote.
