More Internet fraud charges soon-SEC's Levitt
By Jeremy Pelofsky
WASHINGTON. Jan 11 (Reuters) - Securities and Exchange Commission Chairman Arthur Levitt said Tuesday his agency will soon bring more Internet fraud cases, calling the task of rooting out Web scams a "top priority" for his agency.
"We have other Internet cases in the pipeline and undoubtedly there will be more," Levitt told Reuters in an interview. "There will always be bigger fish to fry."
The top U.S. securities regulator declined to provide more details of upcoming enforcement cases. However, Levitt said he has alerted all eleven of the SEC's regional offices to make investigating cases alleging Internet fraud a high priority.
The warning comes less than a week after the SEC charged the creator of the "Tokyo Joe" investment advice Web site for allegedly misleading investors by not disclosing he was selling stocks at the same time he was urging his disciples to buy as well as exaggerating results based on his advice.
Tokyo Joe, whose legal name is Yun Soo Oh Park, and his company, Tokyo Joe's Societe Anonyme, were accused of taking $1.1 million in fees from members in exchange for investment advice, daily stock picks and access to a private chat room where Park allegedly promoted stocks without disclosing his interests.
Nonetheless, Levitt said he would not seek ways to shut down chat rooms that become discussion hubs for the latest banter about the markets and stocks.
"I wouldn't do it, no more than I would do away with country clubs, bars and barber shops and taxis where investors manage to get their tips and their ideas," he said.
Park's lawyer said that constitutional First Amendment issues arise from the charges made by the SEC against his client and, instead, the SEC should have taken regulatory steps to solve any problems.
Levitt rejected that notion, stating "the First Amendment is not a shield for fraud" but conceded that it may take the judicial process to make that clear.
He said, in addition to the SEC's enforcement actions, he expects the self-regulatory arms of the stock markets and private litigation to step in and stymie those who attempt to defraud investors by means of the Internet.
While Levitt praised the Internet arrival on Wall Street as a useful tool to provide more information to investors, mobilize capital and create a more efficient market, he said investors must be wary of the source of investment advice.
"It has provided an enormous opportunity to investors if used properly," Levitt said.
But he was particularly concerned about the credibility some investors were giving to investment advice that is peddled around Internet chat rooms.
If only they could stop spamming on Yahoo, I'd be happy this year.
Jack |
