MrB, here is the article from FT.com....
Nasdaq: Stepping up fight against internet fraud
FRIDAY SEPTEMBER 5 1997
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By Jane Martinson in London
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Nasdaq, the second biggest US stock market, is to introduce a surveillance device to detect the transmission of share-price-sensitive false information on the internet.
The device, which will be installed before the end of this year, is designed to trawl so-called "chat rooms" on the internet looking for false information that could move share prices. It has been specially developed for Nasdaq by SRA, a Virginia-based software company.
Beth Weimer, vice-president of Nasdaq's MarketWatch department, is to tell a conference of exchange regulators in London today that the information flow over the internet is of increasing concern.
"The internet has become a much larger issue because the use of it has become much greater. It is such a powerful information tool," she said.
Fraudsters use the internet to start a rumour or offer unsolicited advice in order to push up the price of an equity. Regulators typically wait for suspicious price and volume movements before launching an investigation.
The new device, which will track some 4,000 Nasdaq-listed companies, will search for market-sensitive information that has not been officially announced. Ms Weimer said Nasdaq could contact companies, asking for information about a product that has been mentioned on the internet.
The development of the device was partly prompted by the controversy over Comparator Systems last summer.
Shares in the manufacturer of fingerprint identification systems soared over three days, setting trading records and setting off regulatory alarm bells. Ms Weimer said investigations later found that the share rises were related to a series of reports on the internet suggesting that the company had signed contracts with US government departments for the fingerprinting devices.
Comparator, which was subsequently investigated by the Securities and Exchange Commission, has since been delisted from Nasdaq.
The exchange, which announced tougher listing requirements last week, has spent between $1m and $2m on the initial development cost of the new device.
Ms Weimer will be speaking about a range of regulatory challenges posed by the internet at today's seminar, hosted by the London Stock Exchange and the Federation International des Bourses de Valeurs, a grouping of international stock exchanges.
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