SEC Approves Series of Measures in Ongoing Fight Against Microcap Fraud
FOR IMMEDIATE RELEASE
Washington, D.C., February 19, 1999 In its continuing fight against microcap stock fraud, the Securities and Exchange Commission today approved a series of regulatory measures that will provide additional investor protections while fostering the capital formation process. The Commission also issued a new investor education brochure that offers tips on how to detect and avoid microcap fraud.
Taken individually, these targeted measures will increase the amount of information available to brokers and investors, close avenues that allow "pump and dump" schemes, and reaffirm the important role that investors play in protecting themselves.
Chairman Arthur Levitt said, "As more and more first time investors enter the markets and the Internet plays a greater role in people's investment decisions, the Commission continues to be vigilant in the fight against microcap fraud. Today's regulatory measures will take a bite out of microcap fraud, but investors must be a part of the solution by doing their homework, asking the hard questions, and being skeptical, especially of get-rich- quick offers they see on the Internet and elsewhere."
In February of 1998 the Commission began a comprehensive and coordinated effort to fight microcap fraud. This four-pronged effort, which includes enforcement, inspections, education and regulation, has been quite successful, yielding dozens of enforcement actions and better educated investors.
The five actions taken today by the Commission:
Nancy Smith, Director of the SEC's Office of Investor Education and Assistance, said, "While the Commission is doing all it can to detect and punish microcap scam artists, at the heart of investor protection is an educated investor. Our new booklet, `Microcap Stock: A Guide for Investors' is a helpful `how to' kit on understanding the microcap market, investing wisely and avoiding scams. It's a must-read for all microcap investors."
For more information about the SEC's four-pronged response to microcap fraud, visit the SEC's Microcap Fraud Information Center at http://www.sec.gov/news/extra/microcap.htm.
View the Chairman's Statement at today's open meeting.