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cbs.marketwatch.com
Op Ed
'Let me in!' says chat room pariah
Banned from 'boards,' Anthony Elgindy speaks out
By Anthony Elgindy
Last Update: 1:45 PM ET Sep 10, 1999Commentary Section
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Editor's Note: Anthony Elgindy, aka Anthony@pacific, was a popular poster on the Silicon Investor message boards until he was banned for bad manners and for promoting his own Web site. This opinion has been edited for length. For another point of view, see the commentary by Richard Walker, the SEC's director of enforcement.
SAN DIEGO (CBS.MW) -- Internet message boards are huge electronic bathroom stalls where anyone can post whatever they want withoutÿany accountability.
Anthony Elgindy:
"The SEC is incapable of policing the police, the NASD.
"Their conflict of interest is basic: government employees strive to build a reputation so they can move on to the more lucrative private sector."
My goal has been to add some credibility and standards to the stalls. I don't believe in censorship, but I favor accountability. If you say something on a message board, you'd better be prepared to back it up with facts or I'll pick it apart. This is what irks my critics.
My censorship from a major online message board for petty and capricious reasons highlights the need for a more just and credible forum.
If one has to walk on eggshells in Internet boards for fear of being terminated or censored, then the boards will ultimately be controlled by those who have ulterior motives.
They will run the boards without fear of being questioned or challenged. If this happens, we can write the Internet off as an electronic billboard controlled by those with the most money.
I receive between 600 and 1,000 e-mails each week, and I know I'm making a difference.
Countless individuals have contacted me to let me know that I've saved them from being taken, or I've caused them to think twice about jumping on the newest pump-and-dump stock scheme, or I've helped improve their investment styles. I take my right to say what I believe very seriously. When anyone tries to silence me, it speaks volumes about their motivations.
Conflict of interest
I come from an industry where the regulators are your biggest competitors. They come from the largest firms on Wall Street. The regulators themselves share a conflict of interest and are in need of scrutiny.
The SEC is incapable of policing the police, the National Association of Securities Dealers. Their conflict of interest is basic: government employees strive to build a reputation so they can move on to the more lucrative private sector. Their ultimate goal is to work at a big Wall Street firm -- or a big law firm representing a Wall Street firm -- or to work on the NASD itself.
The NASD can't possibly regulate itself. It's Wall Street's biggest boys' club. Its sovereigns play golf together and their wives shop together. Expecting industry professionals to regulate themselves is like taking away the IRS and expecting voluntary compliance from taxpayers. The need for scrutiny exists and has always existed, but there was no one willing and able to do it.
Until now.
Accountability
I want each individual who has been lied to by the "industry pros" to be armed with the facts and to demand equal access and accountability from those who claim to be traders, brokers and industry professionals.
I also want accountability from those who claim to be regulators -- those who are policing the markets from Monday through Friday, but then golfing and shopping with the people they're supposed to be policing on Saturday and Sunday.
I would like to be able to let people know where they shop and how they score.
The illusions of impartiality and freedom of speech are just that,ÿ illusions. They can mislead and cause serious damage unless they're exposed as a fraud.
My goal is to take people's focus off of the perception and redirect it to reality.
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cbs.marketwatch.com
SEC enforcer: beware the chat rooms
By Richard H. Walker, SEC
Last Update: 1:46 PM ET Sep 10, 1999
Editor's Note: Richard H. Walker is the director of the U.S. Securities and Exchange Commission's Enforcement Division. This opinion has been edited for length. For another point of view, see the commentary by Anthony Elgindy, a security analyst who's been banned from posting messages on a popular stock site.
WASHINGTON (CBS.MW) --ÿ The Internet has opened up new worlds for investors. But there are many risks.
Richard H. Walker:
"Remember the adage:
"If it looks too good to be true, it probably isn't."
Cyberspace has attracted scam artists ready to deceive and steal. And the Internet offers no mechanism for sorting the good information from the bad.
Complaints received by the U.S. Securities and Exchange Commission involving online trading have risen dramatically over the past three years.
To better detect and prosecute cyber-swindlers, the SEC created a special office of Internet enforcement within its enforcement division. The office oversees the commission's "CyberForce" -- a trained corps of 240 staff members who regularly survey the Internet for fraud.
These efforts are paying dividends. The Commission has brought approximately 100 Internet fraud actions since 1996, prosecuting hundreds of individuals and companies.
But we continue to get complaints from Internet users. There are three main types of Internet fraud the SEC regularly witnesses.
Fraudulent offering
In the fraudulent securities offering, fraudsters pitch securities that either don't exist or contain false promises of high expected returns and low risk levels. They'll often design a Web site to bolster their credibility -- making a scam run from a crook's living room look as sophisticated as an offering by a Fortune 500 company.
SEC's Internet fraud complaints --------------------10/96-9/97-----10/97-9/98----10/98-6/99
Complaints 259 1,114 2,732
increase N/A 330% 145%
Pump and dump
In the "pump and dump," fraud artists buy cheap stock and then disseminate false information through message boards, chat rooms or spam to drive up the stock's price. Once the price has risen, they sell to unsuspecting investors at the artificially-inflated price.
Illegal touting
Through "illegal touting," securities issuers pay promoters to spread favorable information about a company's securities.
We'll continue to conduct Internet surveillance and prosecute securities fraud in cyberspace, but investors must also protect themselves.
Investor beware
Don't assume offers on the Internet are legitimate.When someone gives you investment advice, don't assume it's independent and unbiased.
Buy securities only when you've done enough research to know what you're buying. Get financial statements and analyze them. Find out if the people running the company have ever made money for investors before.
Remember the adage: If it looks too good to be true, it probably isn't.
If someone says you must send money right away, it's a sign he doesn't want to give you enough time to think -- and discover the facts behind the shady scheme.
If you think you've spotted a scam on the Internet, we want to know about it. Please e-mail the SEC?s Enforcement Division.
For more ideas on how to avoid fraud, read our "Internet Fraud Alert" on our Web site, or call (800) SEC-0330, to request a copy of the brochure by mail. |
