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[FYI] SEC May Lack Basis to Bar Stock Touting



http://www.lawnewsnetwork.com/practice/techlaw/news/A18579-
2000Mar14.html

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SEC May Lack Basis to Bar Stock Touting  

Some view Web chat boost of share prices as naughty but legal  

The National Law Journal 

March 14, 2000  

Early in the Securities and Exchange Commission's Internet 
enforcement efforts, agency staffers came across a problematic Web 
site. Eager to shut it down without "making a federal case of it," 
John Reed Stark, the chief of Internet enforcement at the SEC, called 
the site's designer and launched into a reading of his rights. The 
alleged offender interrupted, "Wait a minute -- I'm only 13." Stark 
and the others on the call were shocked, but figured out how to 
sanction the boy: "We told his mother," Stark said.  

[...]

Some say privately that the SEC is stretching the law to fit what is 
the alleged bad behavior: launching a Web site to tout a few thinly 
traded stocks that Colt and the other defendant had purchased -- and 
for which they had executed sell orders before making the 
recommendations. One lawyer posited that such conduct can be enjoined 
only when the person making the recommendation is an investment 
adviser who owes a fiduciary duty to his clients. But without that 
duty, the conduct cannot be considered illegal "front-running."  

[...]

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