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To: astyanax who wrote (2302)	5/9/1999 3:33:00 PM
From: Jeffrey S. Mitchell	Read Replies (1) \| Respond to of 3795

Web trading probes on the rise Sun., May 9 TOP BUSINESS Feds: Net is rife with potential fraud By Edward Iwata OF THE EXAMINER STAFF <snip> Crooks are flocking to the Net like sharks to blood. They're selling bogus investments, manipulating stocks, setting up pyramid and Ponzi schemes, operating without a broker's license, regulators say. While insider trading was the stock scheme of the '80s, Internet fraud is the hot scam of the '90s, state and federal regulators believe. "The Internet is clearly the marketing vehicle of choice for con artists in the '90s," said Bill McDonald, chief of enforcement for the state Department of Corporations. "It's cheap, it's speedy, it's anonymous — all tremendous advantages for fraud artists." Kwong, trial counsel for the SEC's San Francisco district, added: "Investors need to be cautious on the Internet, where there are unlimited numbers of investments being offered." The nationwide crackdown on cyber fraud will heat up soon, with SEC Chairman Arthur Levitt saying he will announce charges against Internet con artists within two weeks. <snip> "Committing fraud over the Internet is a lot easier than doing it the old way," said John Heine, an SEC spokesman in Washington D.C. "For $50, anyone can buy a software package and operate out of your living room. In the old days of boiler rooms, you had to rent a place, buy a lot of phones and hire people to make cold calls." <snip> Pump and dump scams: In this classic fraud, con artists pay people to talk up a weak microcap stock through newsletters, online chat rooms and spam e-mail. When the stock rises, the crooks dump the shares at a big profit. Similarly, they may trash talk a stock, causing its shares to fall. The cons profit from the falling stock price by selling the stock short. Last October, the SEC charged 44 stock promoters with allegedly engaging in pump-and-dump scams involving 235 stocks. Fake Web sites: Crooks design phony Web sites to manipulate the market and lure online investors into trading an obscure stock. <snip> The scam artists move fast, closing shop and emerging again on the Internet within hours. Millions of naive cyber investors are flooding the Internet, making themselves easy targets. Even with their new cyber squads, regulators say they're outnumbered and overwhelmed by the scope of online fraud. Seeking more money and manpower for enforcement, government officials continue to lobby state lawmakers and Congress for funding. "Internet fraud is like an oncoming freight train, and we're clearly not ready for it," said McDonald at the state Department of Corporations. "In a year or two, Aunt Minnie is going to access the Internet via her TV set. Millions of people who are extraordinarily vulnerable will be going online." The most potent weapon against Internet investment fraud? Educating consumers, regulators insist. <snip> Full story: examiner.com =========== Why would anyone want to stand in the way of people trying to help? - Jeff