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To: Jeffrey S. Mitchell who wrote (303)	6/6/2000 7:45:00 PM
From: Jeffrey S. Mitchell	Read Replies (1) \| Respond to of 12465

Re: 4/5/00 - ACLU Slams Plan to Trawl Web for Stock Fraud SEC Would Use Key Words in Hunt for Dubious Offers ACLU Slams Plan to Trawl Web for Stock Fraud SEC Would Use Key Words in Hunt for Dubious Offers April 5, 2000 By David Noack WASHINGTON (APBnews.com) -- A Securities and Exchange Commission plan to trawl for stock market fraud on the Web could violate federal wiretapping laws, the American Civil Liberties Union believes. ACLU Associate Director Barry Steinhardt asked SEC Chairman Arthur Levitt Jr. to suspend the plan. In a letter sent Tuesday, Steinhardt wrote that the plan to look through chat rooms and other Web sites for key words was questionable "under a number of laws that restrict or prohibit governmental surveillance activities." "Many of these restrictions are grounded in the Fourth Amendment to the Constitution, which protects citizens from 'unreasonable searches and seizures' by requiring the government to make a preliminary showing of probable cause and get a warrant," Steinhardt said. In a recent announcement, the SEC said its investigators would target only public areas on the Web, not private e-mail or closed sites. The agency plans to use software that would search for phrases like "get rich quick" that might indicate a dubious investment scheme. Might violate privacy act Steinhardt said the proposed automated Internet surveillance system might violate a number of laws, including the Electronic Communications Privacy Act (ECPA) of 1986. "In particular, ECPA bars the interception of 'electronic communications.' ECPA's broad definition of 'electronic communications' not only includes e-mail messages, but may also encompass multi-party communications such as chat-room discussions," wrote Steinhardt. He said the surveillance proposal would gather all kinds of speech, which would include speech protected under the Constitution. "Widespread trawling of the Internet will inevitably result in the collection of First Amendments protected speech," said Steinhardt. Levitt says plan misunderstood In a statement released today, Levitt suggested that much of the criticism comes from a "misunderstanding" of the plan. "I want to make [it] clear that the SEC has never had any intention of intercepting or monitoring private transmissions, including conversations taking place in chat rooms or on e-mail, in the pursuit of Internet fraud," he said. Levitt said the agency's specifications for software design emphasize that only public forums on the Web would be targeted. Critical congressmen The plan has also come under fire from Reps. Bob Barr, R-Ga., and W.J. "Billy" Tauzin, R-La. In addition, PricewaterhouseCoopers has criticized the plan. "In light of the serious constitutional, legal and policy questions raised by such a system, I urge you to reconsider this plan," wrote Barr. The Georgia Republican said the plan would short-circuit a number of constitutional and legal guarantees dealing with privacy. "To use an analogy based on current practices, the fact that telephones may be used to commit fraud does not entitle the [Federal Communications Commission] FCC, the FBI, or the SEC to engage in wholesale monitoring of all telephone conversations," Barr said. "Instead, you are required to go before a court, meet constitutional and statutory requirements for a warrant and listen only to specific conversations pursuant to the court's order. This system may seem inconvenient to you at times, but it has done a remarkably good job of protecting the privacy of American citizens without unduly hampering law enforcement." Web portals already trawl Late last year, the SEC began seeking software and network application developers and vendors to create the so-called sniffer, or spider, program that would monitor public areas of the Net. The monitoring system would be created "off-site" so as not to lead back to the SEC. The announcement to secure the services of software vendors was made Nov. 2, 1999, through a procurement advertisement in Commerce Business Daily, a newspaper published by the Department of Commerce, which lists notices of proposed government procurement actions, contract awards, sales of government property and other procurement information. What the SEC was proposing is not that much different from what popular Internet search engines and services such as Yahoo, AltaVista and Dejanews already do by sending out a "robot," or spider, to snag Web sites or discussions that include certain key words and other patterns of activity. The National Association of Securities Dealers, a trading regulatory organization, also looks out for suspicious investment information and activity with a project called NetWatch. The need for securities regulations and organizations to monitor online investment activity is tied to an increase in the number of investment-fraud cases on the Internet. The SEC gets between 200 to 300 complaints daily. In a recent appearance before a congressional committee considering the agency's budget, Levitt told the panel that one of the biggest challenges facing the agency is Internet fraud. David Noack is an APBnews.com staff writer (david.noack@apbnews.com). apbnews.com