SEC Forms Unit to Combat Internet Securities Fraud

(July 30, 1998)  The Securities and Exchange Commission announced on Tuesday July 28 that it has formed a new unit to combat securities fraud committed over the Internet.

"While the Internet has many benefits, a small group of thieves is trying to hijack unsuspecting investors on the information superhighway," said Richard H. Walker, the SEC's Director of the Division of Enforcement.

The SEC has already brought over 30 cases involving Internet related securities fraud.   The SEC's Enforcement Complaint Center, the SEC's online communications center on the World Wide Web, now receives more than 120 complaints every day concerning Internet related potential securities violations, many of which provide good leads for investigations or relate to existing investigations.

The new unit has two attorneys, Reed Stark and Jay Perlman.  Mr. Stark joined the SEC Enforcement Division in 1991 after several years practicing commercial litigation with Arent Fox Kintner Plotkin and Kahn. He was named Special Counsel for Internet Projects in 1995, after completing a seven-month detail as an Assistant United States Attorney for the District of Columbia where he prosecuted criminal cases. Mr. Stark also serves as Adjunct Professor of Law at Georgetown University Law Center where he teaches a course entitled "Securities Law and the Internet."

Mr. Perlman began his law career at the SEC in 1991, first in the Division of Corporation Finance where he was a staff attorney, then in the Enforcement Division's Office of Chief Counsel where he served as Branch Chief. Mr. Perlman also prosecuted criminal cases on a detail as an Assistant United States Attorney for the Eastern District of Virginia. The Office of Internet Enforcement will operate out of SEC headquarters in Washington, D.C. and will report to Joan McKown, the Chief Counsel of the Enforcement Division.