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To: Arcane Lore who wrote (4897)	9/13/1998 7:52:00 PM
From: Arcane Lore	Respond to of 26163

In connection with disclosure requirements for compensation of those touting stocks, it may be useful to review what happened in one of the first Internet stock fraud cases: SEXI. One of the SEXI promoters, Thomas Melcher, owner of SGA Goldstar, eventually was sentenced to 12 months in prison and fined $20,000 in connection with a charge of one count of criminal securities fraud. This occurred despite the inclusion in the long disclaimer of SGA Goldstar Whisper Stocks of: "Personnel associated with SGA may own shares in the companies mentioned herein or may act as consultants thereto for compensation." Recently the civil enforcement action was amended. A news story on the updated case noted: "Erich T. Schwartz, a senior SEC attorney handling that case, said this disclaimer doesn't go far enough to warn readers of a conflict of interest. Under federal securities laws, "they have to disclose the source and amount of compensation received. And they didn't do it here," he said." usatoday.com The full SGA disclosure statement can be found at the end of the following article: techweb.com