1. More Internet Fraud Cases to Be Brought: Chairman Levitt said, "In the
next two weeks, the SEC's Enforcement Division will present a number of
cases charging fraudulent offerings over the Internet. These cases would
charge issuers and promoters with making false claims about companies or
offering investments in entirely fictitious companies. We have also been
working with the FBI on a project called 'Operation InvestNet' – a
nationwide initiative to address fraudulent securities activities taking place
over the Internet."
2. Scrutiny of On-line/Day Trading Firms Will Continue: Chairman Levitt
said, "The SEC's Office of Compliance Inspections and Examinations will
continue to inspect firms offering on-line trading. We've already conducted
inspections of firms that represent 80 percent of the market share. Based on
our initial findings, I sent a letter this morning to the largest of the on- line
brokerage firms asking them to improve the quality of their disclosure. The
SEC and the self-regulatory agencies are also inspecting all of the
brokerage firms that specialize in day trading."
3. Creation of Advisory Committee on Technology: Chairman Levitt
announced the formation of a formal SEC public-private sector Advisory
Committee on Technology. The Advisory Committee's mandate will
encompass not only how the Commission might better leverage its
resources to protect investors and safeguard market integrity, but also to
examine issues specifically relating to on- line trading. Chairman Levitt said,
"I have asked General Ken Minihan, former head of the National Security
Agency, and Bran Ferren, a true leader in technology, to lead this effort in
lending cutting edge expertise to the SEC."
4. New Investor Education Web Page Unveiled: Chairman Levitt
announced that the Commission has created a new Investor Education Web
Page, located at www.sec.gov/invkhome.htm. It includes detailed
information and tips on on-line investing, how to detect fraud both on and
off the Internet, and other important information on saving and investing.
5. Chat Rooms to Link to SEC Web Site: Chairman Levitt said, "Chat
rooms, which increasingly have become a source of information and
mis-information for many investors, have been compared to a high-tech
version of morning gossip or advice at the company water cooler. But, at
least you knew your co-workers at the water cooler. For the future sake of
this medium, I encourage investors to take what they see over chat rooms –
not with a grain of salt – but with a rock of salt."
He added, "I've asked the major Internet providers who host these chat
rooms to place a link to the SEC's website where investors can learn more
about on-line investing and file a complaint with us if necessary. I want
everyone in a chat room to know that if someone is taking advantage of the
technology, you have the opportunity to shine the light on it. Think of it as
neighborhood watch on the Internet. With the help of investors, we can get
those people who have only one motivation – to ruthlessly make money at
the expense of others – out of our communities." Chairman Levitt thanked
Senator Susan Collins for drawing attention to this idea through a series of
hearings earlier this year.
Chairman Levitt also thanked President Clinton, Senator Judd Gregg, and
Rep. Harold Rogers for supporting additional resources for the SEC as it
meets the challenges posed by the Internet.
Chairman Levitt also thanked Senator Charles Schumer for his leadership
on this and other investor-focused on-line trading issues.
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