Pennsylvania Securities Commission Unveils Internet Fraud Unit
The Pennsylvania Securities Commission Tuesday unveiled an Internet fraud unit to protect the state's investors from the growing problem of online securities scams.
The Internet Fraud unit is made up of seven staff members, including attorneys, investigators and examiners. The group has been scouring the Internet looking for securities irregularities for about two years. Commissioners decided to make the group a formal part of the commission with the arrival of mainstream online investing.
"The Internet changes so rapidly and we want to keep track of the new technology and attempt to evolve with it," said Jerel Hopkins, coordinator of the Internet Fraud Unit and a lawyer in the commission's Division of Enforcement and Litigation. "Our goal is to ensure [that] electronic commerce can continue to grow and flourish...and we will be active and vigilant to make sure the markets are properly regulated."
Internet fraud typically occurs in one of two ways, said Hopkins: Victims are either solicited through mass e-mails (spam) or as a backdrop for a phony investment scheme. Come-ons usually promise substantial financial returns in a short time.
Hopkins said 11 of the 66 cease-and-desist orders issued by the commission during the 1998-99 fiscal year were connected to Internet fraud. The commission has conducted about 30 investigations relating to the Internet since January, he said.
"The Internet brings Wall Street to Main Street investors, and with technology advancing, more and more people have access to it," Hopkins said. "We need to be vigilant as far as what's going on with that technology and develop rules and effective securities laws and regulations."
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