SEC Hiring Cyber Cops to Battle 'Net Fraudgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
Friday February 18 1:54 PM ET SEC Hiring Cybercops to Police 'Net Fraud
MIAMI (Reuters) - Seeking to stem a ``climate of lawlessness'' on the Internet, the U.S. Securities and Exchange Commission has filled about half of some 60 new jobs for cybercops to patrol the World Wide Web, a top SEC official said on Friday.
His comments followed hackers' attacks last week, which disrupted several popular Web sites, including that of E+Trade Group Inc. (NasdaqNM:EGRP - news), the No. 2 U.S. online brokerage firm.
The SEC plans to add up to 100 people to its 850-member enforcement staff of lawyers and analysts, with 50 to 60 of them dedicated to combating burgeoning Internet fraud, SEC enforcement director Richard Walker said at the 18th annual Federal Securities Institute meeting in Miami.
SEC Chairman Arthur Levitt has declared the fight against Internet fraud to be a top priority for the securities regulator. The ease of spreading false information via e-mail, chat rooms and Web sites has made the Internet fertile ground for stock fraud.
``We have filled about half the positions, although many of the positions have been filled with existing staff. We have also hired some new people,'' Walker said.
SEC officials said the Internet has become an extraordinarily efficient and cheap method of conducting stock frauds that used to be the domain of old-fashioned ``boiler rooms'' and other scams.
``There is a sort of a climate of lawlessness...'Let's try this, let's try that,''' Walker told delegates to the conference. ``You can't play games on the Internet. It's not Game Boy.''
Officials said the SEC has a cyberforce of some 250 investigators who spend part of their time each week surfing the Web looking for fraud. But the agency oversees some 8,500 brokers, 63,000 branch offices of brokerage firms and more than half a million registered representatives.
Walker called ``frightening'' a case that came to light this week, in which someone hacked into a publicly traded company's Web site and posted a false notice.
The suspected hacker boosted the stock of Aastrom Biosciences Inc. (NasdaqNM:ASTM - news) of Ann Arbor, Mich., on Thursday by posting a fake press release on the company's Web site announcing a merger with Geron Corp. (NasdaqNM:GERN - news)
``We've got to locate the hackers and bring them to justice,'' Walker said.
The SEC has expressed particular concern about ``momentum'' sites, where investors are urged to buy a certain stock at a certain time in a bid to build momentum to drive its price higher, and about ``cybersmears,'' in which negative news about a company is disseminated on the Internet to drive down its stock price to enrich short sellers. A short sale involves selling a borrowed stock in hopes of buying it back later at a lower price.
Randall Fons, director of the SEC's southeast region office in Miami, said Internet stock scams involve amateur con artists to an extent never before seen.
``It's laughable,'' Fons said, ``some of the things people are doing to steal money.''
-- Jen Bunker (email@example.com), February 24, 2000