|
SEC: no stocks on eBay
|
 |
October 20, 1999: 7:21 p.m. ET
Officials stop three people from selling stocks on auction site
By Staff Writer Jamey Keaten
|
NEW YORK (CNNfn) - The nation's securities watchdog said Wednesday it issued cease and desist orders against three people who tried to sell stocks through eBay Inc.'s Web site.
In what it called the first case of its kind, the Securities and Exchange Commission said it brought and settled charges in separate cases against three people: Richard Davis of Duncanville, Tex., J.R. Hoff of Hudson, Wisc., and Louis Sitaras, of Jupiter, Fla.
Unlike online brokerages such as e*Trade and Ameritrade that are registered with federal authorities to sell stocks, eBay is a person-to-person auction site..
SEC officials said the men were not penalized because no stocks actually changed hands. The settlement is meant as a warning to other potential violators, they said.
"Selling stock is not like selling Beanie Babies, there are certain regulations that are important to follow," said SEC attorney Craig Martin in San Francisco, Calif.
"The securities laws ensure that investors have access to reliable, accurate information about a security prior to making an investment decision," said SEC District Administrator Helane Morrision in San Francisco. "These laws apply in cyberspace, just as they do elsewhere."
SEC officials said the violations occurred in April and May and commission attorneys discovered the postings within days as part of regular surveillance of securities trading activity in cyberspace.
The SEC order comes as millions of people log onto the Internet to find bargains through auction sites such as eBay's. Officials said it is difficult to estimate the extent of such violations, and they did not say whether their investigations had shown that anyone has lost money as part of such practices.
The SEC investigation is continuing.
Officials said they had no evidence that eBay, the nation's leading Internet auction site, was aware of the postings, but added the company quickly pulled them off its site after the SEC notified the company. The case was not the first time eBay has pulled from its site an offer for the sale of securities.
The company did not have a written policy about securities trading on its site prior to the instances and has since added such guidelines, officials said. Only canceled stock certificates, as memorabilia or novelty items, may now be sold through the site.
All three men were said to have violated Section 5 of the Securities Act of 1933, which has to do with the sale of unregistered stock. The SEC said Davis also violated Section 17(a)(1) and 17(a)(3) regarding fraud.
In the most severe of the cases, Davis offered to sell a five percent stake in a company he founded, Mindhut.com, for a minimum bid of $250,000. Davis claimed he bought the "public shell" of a company and would take Mindhut.com public through that shell within four to five months.
The SEC said Mindhut.com was not an incorporated company at that time, had not purchased such a shell company, nor was there a basis for the claim Davis' company would go public.
|
|
|
|
|
 |
|
