I sure hope this passes:
U.S. senator introduces microcap stocks fraud bill
WASHINGTON, June 9 (Reuters) - A key U.S. Senator Wednesday introduced
legislation intended to give the Securities and Exchange Commission new tools to crack
down on fraud perpetrated in thinly-traded, low-priced securities.
''By giving the SEC the tools it needs to combat such fraud, this legislation will benefit
not only individual investors, but also the vast majority of legitimate small companies
who contribute so much to our country's growth and prosperity,'' said Sen. Susan
Collins, a Maine republican.
Microcaps are prime targets of scam artists who often will artificially pump up share
prices with false statements and then sell them at hefty profits to unsuspecting buyers.
Microcaps include penny stocks and generally describe the low-priced securities of
companies with market capitalizations of less than $300 million.
The bill, known as the Micro-cap Fraud Prevention Act of 1999, will allow the SEC to
bring enforcement actions against securities fraud violators on the basis of enforcement
actions brought by state securities regulators.
''Unfortunately, as our markets bring benefits to more Americans, they also attract those
who would exploit unsuspecting investors through manipulative practices,'' said Collins,
chair of the Senate's Permanent Subcommittee on Investigations.
The bill, co-sponsored by Sen. Max Cleland, a Georgia Democrat and Sen. Judd
Gregg, a New Hampshire Republican, will also help the SEC keep unscrupulous
individuals from other financial sectors, such as banking or insurance, out of the
securities business.
Other provisions include strengthening the SEC's ability to take enforcement actions
against repeat violators. Currently the SEC must request that the the U.S. Department
of Justice initiate criminal contempt proceedings, which can be a timely process.
''This legislation, if enacted, would give regulators even more tools and weapons to rid
the securities industry of this scourge,'' said Peter Hildreth, president of North American
Securities Administrator Assn., the umbrella group for state securities regulators.
The Securities and Exchange Commission said it endorses the legislation, saying: ''This
bill would give us valuable new tools to close of participation in the microcap market by
those who would prey on innocent investors.'' |
