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To: roddio who wrote (4915)	6/25/1999 6:59:00 AM
From: Moosie	Respond to of 5832

New Rules May Mean Trouble For OTC Bulletin Board Firms By JASON ANDERS THE WALL STREET JOURNAL INTERACTIVE EDITION A move to clean up the OTC Bulletin Board by requiring the small companies quoted there to disclose basic financial information has left the companies scrambling to comply, and investors in a bind. The first phase of the plan, which is being implemented by the National Association of Securities Dealers over the next year, begins July 1. Companies that fail to comply will be dropped from the OTC Bulletin Board, and the NASD says that so far, two-thirds of the 94 companies facing the first deadline don't meet the eligibility requirements. By the time the plan is fully implemented, half the 6,700 OTC Bulletin Board companies could be booted. (The NASD also operates the Nasdaq Stock Market.) A place on the OTC Bulletin Board is important because the service -- along with its updated stock quotes readily available on the Internet -- has helped many otherwise unknown companies attract legions of shareholders and achieve heavy trading volume. Without the OTC Bulletin Board, price quotes would be harder to find, and volume -- and potentially stock prices -- could drop dramatically. Many OTC Bulletin Board companies find themselves in a difficult position: trying to calm investors worried over the new eligibility rules, while at the same time facing what regulators say is an insurmountable challenge to file the paperwork and win approval before July 1. Many investors didn't know American Benefits Group was facing eligibility trouble until some postings on an Internet message board noted that an "E" had been appended to the company's stock symbol -- a designation used by the NASD to identify companies that are within 30 days of being dropped. The company, which was once involved in viatical settlements but now says it operates an Internet shopping mall and several mining operations in Madagascar, issued a press release June 4 assuring investors that it was "committed to file the documents on June 11" and maintain its place on the OTC Bulletin Board. (Viatical settlements let terminally ill individuals collect a portion of their life-insurance benefits before they die.) But as of Friday, the Deerfield Beach, Fla., company still hadn't filed with the U.S. Securities and Exchange Commission. "Actually, we said the soonest we could do it was June 11," Jerry G. Mikolajczyk, American's chief executive, said in an interview. "At this time we won't be able to comment on the exact date. Our official stance is no comment on everything." But even if American Benefits Group had mailed the filings when promised, it still would have been dropped from the OTC Bulletin Board. That's because the SEC gets a 60-day comment period before the filings go into effect, and a company's eligibility could be delayed significantly if the SEC has questions about the filing -- facts that some OTC companies failed to mention when they assured investors they would meet the deadlines. "It's not realistic to think that in 30 days or even 60 days these companies could get the necessary filings together," says Adena Friedman, director of trading and market services for Nasdaq. "If these companies didn't start working on this several months ago, there's no way they're going to make it." Ms. Friedman admits that investors could have difficulty unloading stock in companies that are dropped from the OTC Bulletin Board. "We've been telling people this was happening since January, and I think the companies bear the responsibility here for what happens in the trading of their stock," she says. Many of the companies that become ineligible will likely move to the Pink Sheets, a daily publication of quotations distributed by National Quotation Bureau Inc., New York. NQB plans to launch an online, real-time version of the Pink Sheets in mid-July, but those quotes will be accessible only on a subscription basis to brokers and market makers, and won't be directly available to investors. Companies are being phased into the new rules alphabetically by ticker symbol. Only 94 securities are up for review for July 1 (65 of those are currently scheduled to drop off), but in later months as many as 700 securities will be reviewed at once. The new rules require companies to file a Form 10 with the SEC that contains audited financial information, and to file quarterly financial statements. The Internet has helped turn the OTC Bulletin Board into a popular playground for investors looking for big returns. Lured by cheap prices -- many shares trade for less than $1 -- and volatility that can send a company soaring 500% in a single day, investors have flocked to the service, where average daily volume has tripled since 1995 (volume on the larger Nasdaq doubled over the same period). But because many of the most popular OTC Bulletin Board stocks don't report to the SEC, investors have been left to get information on such securities from often dubious sources, including paid stock promoters. And the OTC Bulletin Board has also proved to be fertile ground for investment scams -- almost all of the Internet stock-fraud cases brought by the SEC have involved companies quoted on the OTC Bulletin Board. "These are companies you never would have heard of before the Internet, and in many cases that would have been a good thing," says William McDonald, director of enforcement the California Department of Corporations, the state securities regulator. "I hope the public understands that these delisted securities create a road map that we're going to use to find fraudulent companies." To be sure, SEC filings can be burdensome for small companies. Access Power, a Jacksonville, Fla., provider of telephone service over the Internet, is among the companies that were certified "eligible" in this first round. The company began filing with the SEC before the new rule went into effect and estimates it spent about $20,000 to complete its filings -- and that was with minimal use of outside accountants and lawyers. "It probably took us four or five months to get things together at first, including about four weeks just to get the financials audited," says Glenn Smith, Access Power's chief executive. The company now has one full-time employee -- out of its staff of 10 -- who does nothing but deal with SEC filings. "It's a strain, yes," says Mr. Smith. "But if you're a public company, you owe this to your investors, period." -------------------------------------------------------------------------------- Write to Jason Anders at: jason.anders@news.wsj.com

To: roddio who wrote (4915)	6/25/1999 7:02:00 AM
From: Moosie	Read Replies (1) \| Respond to of 5832

Hackers shut down FBI Web site Senate page also attacked Reuters; The Associated Press WASHINGTON - Hackers apparently retaliating against FBI raids overwhelmed the agency's Internet site this week in an electronic attack that has forced it to shut down the site, the Federal Bureau of Investigation said yesterday. The hackers also forced the U.S. Senate Web site to be taken down after they defaced it in an attack on Thursday. The FBI, which investigates computer hacking and helps safeguard the security of the U.S. government's computers, said the Web site -- www.fbi.gov -- went down Wednesday evening. It remained down yesterday and FBI officials did not know when it would be back online. They said the FBI was investigating the attack as an act of retaliation after search warrants were carried out this week in Seattle, Houston and parts of California in an investigation into computer hackers. They said the FBI has yet to identify any suspects responsible for the attack. The officials emphasized that the hackers did not actually penetrate the FBI's Web site or change any files there. They said the hackers apparently ran a program on another computer that flooded the IBM computer hosting the FBI site, as if millions of Internet users had tried to read the Web site. Paul Bresson, an FBI spokesman, described its site "as a public relations tool" containing press releases and speeches. "There's nothing on it that is in any way sensitive or classified," he said. On Thursday, hackers defaced the Senate's Web page before it was taken down. An obscene message left briefly on the site blamed the attack on what it said was the FBI's harassment of specific hacker groups, including the group that boasted of breaking into the White House site earlier this month. "Who laughs last?" the message said in part, adding that the intent was to rebuke "our friends at the FBI." Earlier this month, a grand jury in northern Virginia indicted Eric Burns, 19, on three counts of computer intrusion. Mr. Burns is reportedly known on the Internet as "Zyklon" and is believed to be a member of the group that claimed responsibility for the attacks on the White House and Senate sites. Mr. Burns was accused of breaking into a computer used by the U.S. Information Agency between August, 1998, and January, 1999. The grand jury also said Mr. Burns broke into two other computers, one owned by LaserNet of Fairfax, Va., and the other by Issue Dynamics Inc. of Washington.

To: roddio who wrote (4915)	6/25/1999 7:04:00 AM
From: Moosie	Respond to of 5832

Defiant hackers threaten more computer mayhem Official U.S. systems hit: Anger directed at FBI crackdown on Web site vandals Jan Cienski National Post WASHINGTON - Apparently outraged by an FBI crackdown on techno-vandals, computer hackers have broken into U.S. government Web sites, forcing many of them off-line, while threatening to wreak more havoc if investigations continue. In recent days, hackers from various organizations have defaced Web sites for the U.S. Senate, the Interior Department and a federal supercomputer laboratory in Idaho Falls, Idaho. The FBI's Web site was down yesterday, part of a week-long effort to beef up security after hackers tried unsuccessfully to break in. The Defense Department also shut down its Internet connection briefly yesterday to make it more secure. The Pentagon is erecting "more barriers against intrusive entry by others who might want to come in and mess around with our systems," said Kenneth Bacon, a Defense Department spokesman. Messages left at the attacked sites boasted they were vandalized to retaliate against the FBI's investigation of hacker groups, including one outfit that claimed it had broken into the White House Web site last month. The attackers also threatened further intrusions. "It's our turn to hit them where it hurts," boasted a message left on the Interior Department Web site. The hackers also indicated they were going after every computer on the Internet with a .gov address, which marks U.S. government sites. "We'll keep on hitting them until they get down on their knees and beg." The FBI would not comment on whether the attacks were related, but confirmed it executed four search warrants last week in Texas in a probe of computer break-ins. In an online interview with The Associated Press, a hacker who claimed responsibility for the supercomputer lab attack said further FBI investigations would result in more damage. The hacker identified himself only as M1crochip, living in Portugal and a member of a group calling itself F0rpaxe. "If FBI doesn't do anything and doesn't stop making our life miserable, each member of F0rpaxe will discuss an eventual destruction of every single server," the hacker said, referring to the powerful server computers that form the backbone of the Web. "If that happens, everything goes down." Last month, a grand jury in northern Virginia indicted Eric Burns, 19, on three counts of computer intrusion. Mr. Burns is reportedly known on the Internet as Zyklon and believed to belong to a group that claimed responsibility for the attacks on the White House and Senate sites. Zyklon allegedly compromised dozens of secure computer systems around the world, including ones operated for the Toronto Star and the Chinese government. The Interior Department, which manages America's national parks, said the hackers had entered a backup Web site rarely seen by the public. The department's main site was up and running. Tim Ahern, a department spokesman, said last month a group claiming to be Chinese broke into the Interior Web site to protest the NATO bombing of the Chinese embassy in Belgrade. Hackers take pride in breaking into computer systems, both to demonstrate their disapproval of government institutions and to show that computer protections are inadequate. In one recent attack, Serb hackers brought down the NATO Web site to protest the bombing campaign against their country. Most Web sites are meant to be accessible to the public and are therefore not difficult to break into. But, by the same token, those sites rarely contain anything very secret, said James Corbett, a visiting professor at the Massachusetts Institute of Technology. Any information that is meant to be kept secret is usually on a separate system, protected from outside access by "firewalls." "I would very much doubt that they could do any real damage," he said of the hacker attacks on Web sites.

To: roddio who wrote (4915)	6/25/1999 7:06:00 AM
From: Moosie	Read Replies (1) \| Respond to of 5832

Canada becoming more vulnerable to hackers: CSIS 'Wide open to intrusion' Jim Bronskill Southam News OTTAWA - Internal studies by Canada's spy agency warn that computer hackers and cyber-terrorists pose a growing threat to vital electronic systems. An increasing number of criminals, extremists and hostile states can launch attacks on critical networks ranging from power grids to banking systems, says one of the newly declassified reports by the Canadian Security Intelligence Service. Canadian networks are particularly vulnerable, notes the CSIS study, Information Operations: Nature and Magnitude of the Threat. "Assessments made by the private sector indicate that Canadian government installations are wide open to intrusion," reveals the August, 1998, document, obtained by Southam News under the Access to Information Act. It says the threats will become "more complex and numerous" as rogue groups and individual hackers acquire the widely accessible tools -- computers, modems, telephones and software -- to breach systems and create digital havoc. "The vulnerabilities of the Canadian information infrastructure are increasing steadily, the means to exploit these weaknesses are readily available and the costs required to attack these vulnerabilities continue to drop," the study found. "Even though the government and the private sector in Canada will act to secure data and networks, the magnitude of the threat posed to the Canadian information infrastructure will rise." CSIS spokesman Daniel Lambert said the service is working with the Defence Department, police and U.S. agencies to assess the problem. "It's something that we're continuously looking at in terms of our threat and risk assessments, because it is evolving." While there have been no large-scale computer assaults in Canada, several major companies have been hacked and the Internet Web sites of numerous government agencies, including CSIS, have been breached. A number of cyber-attacks have caused considerable damage in the United States. A Swedish hacker put Florida's 911 service out of commission, while an American teenager shut down the operations of a regional airport in Massachusetts. Medical records, financial data, credit histories, tax records and even police files can be manipulated by outsiders. The growing dependence on computer networks that are increasingly linked to one another means there is "no safe haven," says the report, one of several CSIS briefs and studies on the emerging problem. "Borders have become meaningless. One can communicate, conduct business, shop, move funds and attack computer systems without leaving home or office." Sophisticated attack software -- often found on the Internet -- can be used to exploit weaknesses and "could threaten national security" if turned against key systems, warns a follow-up study completed in December.