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THE SEC & THE INTERNET: REGULATING THE WEB OF DECEIT
Consumer Finance Law Quarterly Report (2013)
  • Lawrence J. Trautman
Abstract
The internet has created challenges for regulators of financial markets unimagined over seventy-five years ago by drafters of the Securities and Exchange Acts. The recent explosion in internet use has provided many benefits for investors and publicly-traded companies. Examples of the wealth of information available on demand and at little cost to the investing public includes: the reported financial results of issuers; press releases; product information; research reports of securities analysts; product information; and has enabled easy and prompt access to information about corporate events. The SEC has provided guidelines to allow for an issuing company to disseminate to its shareholders the required periodic reports (10-k, 10-q, 8-k, proxy statements, etc.). However, a series of new challenges face regulators of our securities markets. Global securities markets volatility during 2008-2009 and sovereign debt concerns during 2011 has resulted in triple-digit swings in the Dow Jones average, proving to be more the rule than the exception. At a time of profound global economic stress, cyber-securities fraud arises as a new challenge in the evolution of the securities markets. A few of the creative tools available to today’s cybercriminals include: the relative ease of the data theft; transfer of money in the blink-of-an-eye across borders; and stolen identities facilitating market manipulation. Capital formation is the very lifeblood of job creation. The internet has resulted in efficiencies, cost savings, and real productivity gains to all in the capital raising process. This article provides an update regarding the growth and global availability of the internet, an abbreviated overview of the law of electronic transactions, brief discussion of jurisdictional challenges to the prosecution of internet fraud and wrongdoing, a brief history of the U.S. Securities and Exchange Commission (“SEC’s”) incorporation of internet technology into the financial reporting process, identifies the evolving cyber-environment in which securities issuers must adapt to comply with regulatory requirements, and explores developing areas of cyberfraud.
Keywords
  • Computer Fraud & Hacking,
  • Cybercrime,
  • EDGAR,
  • Enforcement,
  • Entrepreneurship,
  • ESIGN,
  • ICANN,
  • Identity Fraud,
  • Internet,
  • Technology and Crime,
  • Office of Internet Enforcement,
  • Regulation FD,
  • SEC,
  • Securities Disclosure,
  • Securities Fraud,
  • UCITA,
  • UETA,
  • XBRL
Publication Date
2013
Citation Information
Lawrence J. Trautman. "THE SEC & THE INTERNET: REGULATING THE WEB OF DECEIT" Consumer Finance Law Quarterly Report (2013)
Available at: http://works.bepress.com/lawrence_trautman/16/