FC: Rep. Tauzin to SEC: Don't regulate dot com financial sites

From: Declan McCullagh (declanat_private)
Date: Tue Jun 12 2001 - 13:51:18 PDT

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    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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