BILL INTRODUCED TO ATTACK POSTER FRAUD,
TO PROTECT SMALL BUSINESS AND INVESTORS.
Wednesday June 9, 5:11 pm Eastern Time
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 Commissionnew 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.'' |
