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News Release: 99-08
GRAY DAVIS, Governor
Date: 04/26/99
WILLIAM KENEFICK, Acting Commissioner
Department of Corporations Posts "Cyber Investment Fraud" Page on Website
Sacramento, April 26, 1999 — In conjunction with the North American Securities Administrators Association (NASAA) Investor Education Week April 25-May 1, 1999, the Department of Corporations announces the creation of a new page on its Website devoted to the department's efforts to combat investment fraud on the Internet.
Over the past decade, technology has revolutionized the securities markets. Technology has also revolutionized the way securities (and other investments) are bought and sold, and the way the securities industry operates. The investing public now has access to vast quantities of information concerning securities, the markets, and investments in general. Consequently, many investors have opted to make their own investment decisions, thereby bypassing traditional methods.
The department’s new page on its Website provides answers to the most frequently asked questions about how to recognize investment fraud on the Internet. The Website offers cautionary advice about Internet trading and day trading, both popular activities for today’s investors. You can find the new page at the department’s Website at www.corp.ca.gov. Click on the "Investor Education" button.
California was one of the first states in the nation to recognize the threat to investors from unscrupulous dealers intent on defrauding consumers. Since 1994, the Department of Corporations has been working with the other states through the North American Securities Administrators Association to alert the public to the risks of investing through the Internet or investing in Internet products or services. In March of 1998, the department’s Enforcement Division set up an Internet Surveillance Unit consisting of two attorneys, one investigator and one examiner to engage in surveillance activities to identify illegal and fraudulent securities and other investment offerings on the Internet and to bring enforcement actions. Since that time, the department has issued 39 Desist and Refrain Orders to a total of 158 subjects, has filed one civil injunctive action and obtained a preliminary injunction against 26 defendants, and has referred two cases for criminal prosecution involving illegal or fraudulent Internet offerings.
The Department of Corporations is California's Investment and Financing Authority, reporting to the Business, Transportation and Housing Agency and the Governor. The Department is responsible for the regulation, enforcement and licensing of securities, franchises, off-exchange commodities, investment and financial services, independent escrows, consumer and commercial finance lending and residential mortgage lending. For further information or to obtain a complaint form, see the Department's Web site at www.corp.ca.gov.
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