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To: The Philosopher who wrote (2410)	5/22/2001 10:30:49 PM
From: joseph krinsky	Respond to of 5315

news.cnet.com SEC to mull regulating financial sites By Reuters May 22, 2001, 1:25 p.m. PT Federal securities regulators will hold a discussion Wednesday to see how popular financial Web sites like Yahoo Finance and Motley Fool operate and will also hear arguments over whether or not they should be regulated as brokerages. The sites provide financial information and portfolio analysis tools. They also have hyperlinks to broker-dealers so that investors can open accounts and buy and sell stocks. As the these financial portals have gained in popularity over the years, they have begun competing with brokerages for customers. As a result, brokerages are increasingly asking whether portals should have to play by the same rules as they do. "At least one of the questions broker-dealers ask is why aren't the portals registered?" Laura Unger said in a March speech shortly after being named acting chairman of the Securities and Exchange Commission. "My first question, though, is, 'What are the portals doing? What are their relationships with the broker-dealers they hyperlink to? What are their business arrangements and compensation arrangements? How do the hyperlinks work, and what do they look like?'" New York securities lawyer Joe McLaughlin said one area of concern for the SEC is whether portals are being paid by brokerages when a customer opens an account and executes trades, which the commission calls transaction-based compensation. The SEC has a "pretty consistent philosophy that if you are getting paid on a transaction basis by a broker-dealer or refer someone to that broker-dealer, then you have crossed the line into broker-dealer territory too," he said. Being regulated as a broker-dealer costs money and requires a lot of paperwork, explained McLaughlin, who said portals have no regulatory oversight. Lawrence Greenberg, the chief legal officer at Alexandria, Va.-based Motley Fool, one of the leading financial portals, declined to comment on any individual compensation arrangements his firm may have. But "We say on our site the brokerages who have ads on the site are advertisers who pay us," Greenberg said. He added, "We hope that investors will have the information that they need in order to make totally informed (investment) decisions, including who their broker is, and that they get the protection that they need." Representatives from Internet access leader America Online, Motley Fool, Web news provider MarketWatch.com and brokerage Charles Schwab are expected to attend the discussion along with Unger and other market regulators from the SEC and the National Association of Securities Dealers. The afternoon event is expected to last about four hours.