SEC gets $7 million to play Net watchdog
By Bloomberg News
Special to CNET News.com
December 7, 1999, 4:55 p.m. PT
WASHINGTON--The Securities and Exchange Commission received $7 million for Internet oversight in the fiscal 2000 appropriations bill signed by President Bill Clinton last week, SEC enforcement director Richard Walker said.
The SEC intends to use most of these funds to help police the Web for possible stock manipulation, Walker told the American Institute of Certified Public Accountants' annual conference. The commission has been short on enforcement staff to investigate suspicious conduct detected by Internet surveillance.
"This is one of the better investments Congress could make," Columbia University law professor John Coffee said. "The SEC needs to bring more cases against chat room manipulation of stocks."
The SEC got a total of $367.8 million from Congress and the president, a 13.5 percent increase from fiscal 1999 and 2 percent more than the administration requested. Of this amount, Congress earmarked $7 million for Internet oversight.
Although most of this money will go for enforcement, some may go to other functions such as Internet-related rule-making or inspections of electronic brokerages, Walker said.
SEC officials have said that they are detecting most suspicious stock activity on the Internet but lack the resources to investigate all leads. The commission is soliciting contractors' bids to develop Internet surveillance technology that has been valued at about $1 million, SEC spokesman Chris Ullman said.
The commission has conducted three Internet sweeps in the last year, charging a total of 83 people and companies with fraud. Among them were a California man accused of selling worthless gold-mining investments and a Massachusetts man who allegedly offered investments in a company he touted as the next Microsoft.
The SEC may ultimately end up having to cut $1.4 million from its overall budget. The appropriations bill requires federal agencies to make across-the-board cuts of 0.38 percent, though it gives substantial flexibility to agency heads. SEC chairman Arthur Levitt hasn't yet decided how he will comply with this requirement, Ullman said.
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