This is the nineties, so no one's admitting they did anything wrong, but the Securities and Exchange Commission last week settled its first-ever case involving online stock sales. The agency issued cease-and-desist orders against three individuals who had tried to hawk stocks over online auctioneer eBay.
The three men agreed to settle the case without admitting or denying the allegations, according to wire reports in the New York Times and the Wall Street Journal, and eBay was not accused of any wrongdoing. But the alleged scams certainly took chutzpah. In the first case, the SEC charged the founder of Mindhunt.com with posting an offer to sell off 5% of the company for $US250,000. The posting claimed Mindhunt would go public in the next few months. No way, said the SEC: Mindhunt had no basis for claiming it was on the verge of going public, and the posting represented an illegal offering to sell unregistered stock. To add insult to injury, the Washington Post's Sri Ramakrishnan wrote, the offer drew no bids. The company mentioned in the second stock offer wasn't even incorporated at the time.
"The securities laws ensure that investors have access to reliable, accurate information about a security prior to making an investment decision," Helane Morrison, district administrator for the SEC's San Francisco office said in a statement. "These laws apply in cyberspace, just as they do elsewhere."
Wired News' Joanna Glasner reminded readers that eBay has seen its share of posters trying to sell stocks and other securities, including a well-publicised attempt in August to sell shares of Iridium, whose stock had ceased trading after the company filed for bankruptcy protection.