Concerns over Internet Investment Fraud

26 August 1998

The Securities and Exchange Commission (SEC) has jumped into the Internet enforcement fray too. On July 28, the SEC announced the formation of a new and specialized unit to combat securities fraud occurring over the Internet.

According to Richard H. Walker, the SEC's Director of the Division of Enforcement, "While the Internet has many benefits, a small group of thieves is trying to hijack unsuspecting investors on the information superhighway."

According to the SEC, it has already brought more than 30 cases involving Internet-related securities fraud. They have involved virtually every type of investment scam, including phony offerings, market manipulations, affinity frauds (e.g., frauds that target a particular ethnic or religious group), and pyramid and ponzi schemes.

What the SEC Web site ( lacks is easily available information for people who want to know more about online securities fraud. While the new unit to combat online securities fraud is a good step, the Web site needs work. The SEC might want to talk to the FDIC for hints on improving their site.

Mark Grossman's "TechLaw" column appears in numerous publications. Mark Grossman has extensive experience as a speaker as well. If you would like him to speak before your group or corporate meeting, please call (305) 443-8180 for information.

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