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"Day-trading firms lax with rules - SEC report finds no widespread fraud"

By Rex Nutting, CBS MarketWatch Last Update: 12:09 PM ET Feb 25, 2000 SEC Filings "WASHINGTON (CBS.MW) -- While many rules are still being violated, there is no evidence of no widespread fraud in the day-trading industry, the Securities and Exchange Commission said Friday."

"The SEC report noted that lax supervision was rampant in many firms. See the full report."

"Following an examination of many day trading companies, the SEC said it would pursue enforcement actions against several firms. And the agency promised that all day-trading firms would be examined."

"The report was released as a Senate committee opened a second day of hearings into the day-trading industry. Lori Richards, director of the SEC's examination and compliance office, testified at the hearing."

"The report suggested that many day-trading firms had improved their disclosure of risks to investors since last fall."

"In September, SEC Chairman Arthur Levitt told Congress that the SEC has serious concerns with the practices of many day-trading firms, including their advertising, disclosure, net capital requirements and margin lending. Read his testimony."

"On Thursday, the committee's chairman, Sen. Susan Collins, R-Maine, charged that day-trading firms were racking up huge profits at the expense of investors. See related story."

-- Deb M. (vmcclell@columbus.rr.com), February 25, 2000

Answers

Here are another few links that shed more light on the subject. Could this be what breaks the bubble?

A sweep last year found numerous possible violations of rules regarding advertising, margin requirements, short selling and other practices...

SEC Testimony Regarding Day Trading

SEC Report Regarding Examining Day Trading Broker-Dealers

-- Deb M. (vmcclell@columbus.rr.com), February 25, 2000.

"there is no evidence of no widespread fraud"

Rex needs a spanking.

-- canthappen (n@ysayer.com), February 25, 2000.

LOL, Can't. It's a good thing I put down my soda before I read your post... Somehow, I think a few more folks, other than Rex, are gonna need a good spanking, like most of the turkeys who do day-trading.

Last month I was discussing the stock market with one of my uncles, who boasted that one of his good friends turned $10,000 into $780,000 because of NASDAQ/DOW, and that they were going to continue to go up - they're "really undervalued". When I asked him how much of that had been turned into cash, he said "None, the capital gains taxes would kill him." I wonder how much he's lost since then...

Perhaps I should read "The Emporer's New Clothes" to him - after all, it's just another fairy tale, just like the ones the stock brokers are telling him.

-- Deb M. (vmcclell@columbus.rr.com), February 25, 2000.

"When I asked him how much of that had been turned into cash, he said "None, the capital gains taxes would kill him."

Thanks, Deb. Priceless!

-- canthappen (n@ysayer.com), February 25, 2000.

Maybe there is "no controlling legal authority".

-- JB (noway@jose.com), February 25, 2000.