---
FOR IMMEDIATE
RELEASE:
CONTACT: Ken Johnson or Peter Sheffield
Tuesday, June 12,
2001
202.225.5735
Tauzin Warns SEC: Don t Regulate
Financial Internet Portals
Washington (June 12) In a strongly-worded letter, House Energy and Commerce
Committee Chairman Billy Tauzin (R-LA) today warned the Securities and
Exchange Commission (SEC) against regulating financial Internet portals
that make investment related information available to consumers.
Absent direction from Congress, there is no basis for the SEC to extend
regulation to Internet portals, Chairman Tauzin reminded the agency in the
letter sent to Acting Chairman Laura Unger.
The SEC has had a regrettable tradition of attempting to
regulate in areas over which it lacked jurisdiction, the letter
continues. Internet portals should not become part of this tradition.
(Attached below is a copy of the letter sent today to SEC Acting Chairman
Unger.)
June 12, 2001
The Honorable Laura Unger
Acting Chairman
United States Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Dear Acting Chairman Unger:
I am writing in reference to the Portals Roundtable the
Securities and Exchange Commission (SEC) held on May 23, 2001. The SEC
needs to be careful not to create the impression that it is considering
regulation of Internet portals. Internet portals do not fall within the
jurisdiction of the SEC. Absent direction from Congress, there is no basis
for the SEC to extend regulation to Internet portals.
Under the Securities Exchange Act, a person is subject to
broker-dealer regulation if that person is engaged in the business of
effecting transactions in securities for the account of others. Portals
are passive vehicles that aggregate and make investment related information
available to their users. This provision of information is at the heart of
the Internet revolution. It has served to enhance the ability of
individuals to participate in financial markets with a sophistication that
was unimaginable only a few years ago. It is no coincidence the rise in
individual participation in the markets in the past decade parallels the
growth and acceptance of the Internet.
Any attempt to sweep Internet portals into the scope of Federal securities
regulation is unwarranted. Portals do not recommend specific
securities. Nor do they take action involving brokerage accounts or
securities transactions. Suitability obligations and other investor
protection concerns simply do not arise.
In addition to financial content, portals often provide advertising space
for financial services providers in the same manner they display
advertising from non-financial services businesses. Many portals rely on
advertising revenues because they provide financial information to their
users for free. Just as online brokers are subject to the same regulatory
regime as traditional brokers, Internet based financial websites should be
treated no differently than traditional counterparts in print, television,
and radio media.
Not even a generous reading of the language effecting transactions in
securities would sweep in the activities of financial portals. The SEC has
had a regrettable tradition of attempting to regulate in areas over which
it lacked jurisdiction. Internet portals should not become part of this
tradition.
Sincerely,
W.J. Billy Tauzin
Chairman
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