House panel questions automated surveillance by SEC : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Posted at 5:27 p.m. PDT Tuesday, April 4, 2000

House panel questions automated surveillance by SEC

WASHINGTON (Reuters) - The leaders of a Congressional panel Tuesday said an automated system sought by the Securities and Exchange Commission to monitor fraud on the Internet could violate the privacy of Americans.

The SEC is seeking proposals to purchase software programming that would search out key words on the Internet like ``get-rich quick'' and other phrases that are typically used in schemes to defraud investors.

``We are concerned that this project would unduly impinge upon the privacy rights of ordinary Americans who have nothing to do with securities fraud,'' said Rep. Michael Oxley, an Ohio Republican and chairman of the House Commerce subcommittee on finance, and the panel's ranking Democrat, Edolphus Towns of New York, in a letter to SEC Chairman Arthur Levitt.

Levitt has defended the proposed automated system which he said would free up attorneys who are spending their time manually searching the Internet to ferret out get-rich quick schemes or other ploys that promise high-returns on small investments.

``In no way is this a new effort to seek new information,'' Levitt told a House appropriations subcommittee last week.

The House subcommittee asked Levitt to inform the panel on what authority the agency has to review private communications over the Internet, if probable cause will be determined before examining communications and what legal basis will be used in determining certain phrases to seek out on the Internet.

Additionally, the panel asked Levitt to explain how monitoring e-mail communications of private parties on the Web would not violate unreasonable search and seizure provisions of the Constitution and what alternatives to automated searches has the securities regulator considered.

An SEC spokesperson was not available for comment.

Oxley and Towns said they may hold public hearings on the matter depending on the SEC's response to their questions and the outcome of a staff briefing the members also requested.

-- Martin Thompson (, April 04, 2000

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