FOR IMMEDIATE RELEASE 98-69

SEC Creates Office of Internet Enforcement to Battle Online Securities Fraud

Washington, D.C., July 28, 1998 -- The Securities and Exchange Commission today announced the formation of a new and specialized unit to combat securities fraud occurring over the Internet. John Reed Stark, the current Special Counsel for Internet Projects in the SEC Enforcement Division will serve as Chief of a new unit, the Office of Internet Enforcement, and Jay Perlman, a senior attorney in the Office of the Chief Counsel, will serve as deputy. 

"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 more than 30 cases involving Internet-related securities fraud that have involved virtually every type of investment scam, including phony offerings, market manipulations, affinity frauds (e.g. frauds that target a particular ethnic or religious group), and pyramid and ponzi schemes.

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.  "Since the first Internet-related case we brought back in 1995 involving a scheme to sell unregistered securities in a world-wide telephone lottery over the Internet (SEC v. PleasureTime) to our most recent case involving a $7.2 million ponzi scheme peddled via the World Wide Web (SEC v. Richmond), we have done our best to keep the Internet safe for investors. With the launching of this new unit we hope to beef up our Internet presence and continue the success of our Internet Program," said Mr. Walker.

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.