Reuters Interview,,The SEC is very specific as to who they are targeting!!
January 14, 2000
SEC to Hire More As Internet Fraud Burgeoning
By Reuters
SEC to Hire More As Internet Fraud Burgeoning
(January 14, 2000)
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WASHINGTON (Reuters) ? The Securities and Exchange Commission will soon begin a hiring spree for its enforcement division as it zeros in on Internet fraud, which is becoming a "burgeoning problem", a top SEC official said on Friday.
The securities regulator is slated to add as many as 50 to 60 people to its 850-person staff of investigators, lawyers and accountants, said Richard Walker, director of the SEC's enforcement division.
"One of the amazing things about the Internet is it changes so rapidly," he told a Washington, D.C. Bar luncheon. "There may still be the same scams, but they have new twists that are particularly unique to the Internet."
About 325 of the staff are based in the Washington headquarters while the other 525 are anchored in 11 regional offices spread across the United States.
In comparison to its relatively small staff, there are 8,500 broker-dealers, 63,000 branch offices of brokerage firms, and 556,000 registered representatives, Walker said.
The securities regulator's greater attention on the Internet comes amid an explosion of financial information on the Internet and at a time when discussions about particular stocks has become a new pastime.
SEC Chairman Arthur Levitt told Reuters in an interview earlier this week that rooting out Internet scams was a "top priority" for his agency. He urged the U.S. Congress to provide additional funds to help stem the flow of its staff to the private sector, where salaries are much higher.
Walker said the agency was particularly worried about momentum sites, where a particular stock is highlighted and investors are urged to buy it at an appointed time in an attempt to build momentum and push the price higher.
"It's a new, speedier kind of manipulation than in the past," Walker said. "You can achieve a manipulation with the snap of your fingers by reaching large numbers of people very, very quickly and artificially adding to the price of a security."
Additionally, the SEC is targeting fraud at Internet sites and chat rooms, primarily those that charge membership fees that promote particular stocks and are not being forthcoming about compensation received for highlighting it or selling while urging others to buy.
"It's sort of like an investment newsletter on steroids," Walker said.
Last week the SEC filed fraud charges against a New York resident, who runs an Internet site called Tokyo Joe's Societe Anonyme, for allegedly selling stocks while promoting others to buy, misleading his membership about his past performance, and failing to disclose compensation for touting stocks.
The SEC is also targeting impostors, such as instances of posting false messages about a company in an attempt to boost a stock, Walker said.
Additionally, to help guide companies as they utilize the Internet as an information resource, the SEC is considering issuing a concept release soon on the responsibility for content of web sites, Walker said.
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