SEC to Snoop for Fraud
Wired News Report
4:30 p.m. Mar. 28, 2000 PST
The U.S. Securities and Exchange Commission plans to unleash a Web crawler that scours websites, message boards, and chat rooms for signs of stock fraud, and that makes privacy advocates nervous.
"[This] is equivalent to, in my opinion, wiretapping ... the equivalent of planting a bug," Larry Ponemon, the partner in charge of privacy issues at consulting giant PricewaterhouseCoopers, told the Associated Press.
In January, the SEC invited PricewaterhouseCoopers and 106 other companies to help develop and operate the fraud-sniffing system. PricewaterhouseCoopers is the first to balk.
The company said the SEC's crawler, which would patrol the Web looking for 40 or so suspicious phrases like "get rich quick," might violate the Constitution's prohibition against unreasonable search and seizure.
The SEC counters that it will only search public forums like Web pages and newsgroups -- something it already does by hand, but inefficiently and at great expense.
Stock fraud is so persuasive and easy online, the SEC has to step up its efforts to combat it, the agency said. It said it will never attempt to monitor private exchanges such as email.
"The crooks are using the new technology at hand, and the cops need to use the technology to stay ahead of the crooks," said Marc Beauchamp, executive director of the North American Securities Administrators Association, in an interview with the Associated Press.
"This is government spying on the innocent, plain and simple," George Getz, a spokesman for the Libertarian Party told AP. "It's no different than the police tapping everyone's phones just because someone might have committed a crime."
The SEC doesn't have the authority to arrest people it suspects of stock fraud, though it can file civil law suits.
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