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SEC to Target Online Fraud, Levitt Says on PBS' `Rukeyser'
Owings Mills, Maryland, March 31 (Bloomberg) -- The Securities and Exchange Commission will focus this year on curbing financial fraud, especially online, said SEC Chairman Arthur Levitt on ``Wall Street Week With Louis Rukeyser.'
The SEC's plan to use an automated surveillance system to find financial scams on the Internet isn't meant to invade people's privacy, Levitt said. Instead, it's a way for the SEC to protect online investors from fraudulent information.
``We regard (the Internet) at this time in the market cycle as being a pretty fertile area for fraudsters,' Levitt said.
Yesterday, Federal prosecutors charged a Texas day-trader with posting a fake profit warning for Lucent Technologies Inc. on a Yahoo! Inc. Internet message board. Lucent shares dropped 3.6 percent after the posting, though they bounced back after it was exposed as a fake.
``We've brought over 100 cases in terms of various kinds of Internet fraud, and the number is growing, as use of the Net is growing,' Levitt said.
Levitt said he doesn't think regulators should intervene directly in markets. Instead, ``the role of a regulator is to keep competition in our markets fierce but fair.' One way to achieve this is to make sure all companies follow strict guidelines in reporting earnings, so that investors are confident that the numbers are reliable, he said.
Another way of keeping the markets fair is by cracking down on so-called selective disclosure, in which companies release key information to analysts or institutional investors without making it public. Levitt condemned the practice and said he will press for further media access to such meetings.
``America's investors cannot get enough information. We want to see to it that they get it at the same time as anybody else gets it, and if companies observe that, we'll have no problem,' Levitt said.
Apr/01/2000 0:15
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