Forgery foiler
By STAFF Kate Ballen, Darienne L. Dennis, Alan Farnham, Stuart Gannes, Carrie Gottlieb, Julianne Slovak

(FORTUNE Magazine) – Contemplating a career as a counterfeiter? Put your ascot back in the drawer. A laser technology developed by the Light Signatures subsidiary of Telecredit has exposed fakes of everything from Levi's to cosmetics. Now J.P. Morgan and Manufacturers Hanover have tested it as a way to root out phony stocks and bonds. Cato Carpenter, an analyst for Alex. Brown & Sons, believes counterfeiting costs the securities industry hundreds of millions of dollars annually. ''How many phony certificates are being held by banks or brokerages as collateral on loans or margin accounts?'' he asks. ''The holders don't want to face up to that question.'' Fakes sneak by because methods for detecting them are crude. Morgan unmasked a cache of phony Exxon bonds last summer when one of its clerks said they ''felt oily.'' The enemy's technology is growing sophisticated. Color photocopying machines promise to raise counterfeiting from an art to a manufacturing process. ''You don't need Carlos the etcher anymore,'' says Morgan spokesman John Morris.

Light Signatures President Joe DeLuna explains that his machine microscopically examines the arrangement of fibers in a certificate and compares it with an image recorded when the certificate was issued. Such random natural patterns cannot be duplicated. The machine also reads a magnetic strip on the certificate, and any attempt to alter the paper or the strip makes the certificate worthless. The securities industry has long hoped to settle on a reliable, automatic system for spotting fake stocks and bonds. This looks like it.