The Australian Securities and Investment Commission's (ASIC) Electronic Enforcement Unitââ,¬"which regulates the Internet to ensure online securities fraud does not occurââ,¬"confirmed it has investigated 74 suspicious matters to date this year, up from 55 incidents the previous year.
However, the securities cop would not put the rise in investigations down to an increase in shonky practices, saying instead that last year the Unit's inquiries may have been more -resource intensive". It also believes improved resources this year could equate to more suspicious matters being pursued.
Leif Gamertsfelder, head of the e-security group at law firm Deacons, agreed that resources would come into the mix, but said people becoming more and more familiar with technology was a factor that would lead to an increase in securities-related fraud.
-Once a greater pool of people are familiar with the technology, they will exploit that," Gamertsfelder told ZDNet Australia.
-In my opinion the pool of people who are potential victims is growing as well, as more and more people come online. Feed that into the formula and you're going to have more cases investigated by ASIC," he added.
Keith Inman, ASIC director of electronic enforcement, agreed that the public's increasing familiarity with technology was something that the Unit had noticed during its investigations.
-There's always new ways to use the growing plethora of Internet communication," Inman said, adding that ASIC had seen a trend in how people were using online communication tools in a combined and concerted way to promote financial Web sites that did not always adhere to the law.
Scammers and suspicious sites are using channels such as e-mail, Internet Relay Chat (IRC), and bulletin boards -in a combined way to get the message across to more people", Inman said.
Investigations pending
The Electronic Enforcement Unit has investigated 345 matters since its inception in 1999 and will prosecute individuals through the Director of Public Prosecutions if deemed necessary. However, Inman pointed out that if an online entity is unaware of its obligation under the law, and is happy to return funds and withdraw offending material, the matter wouldn't be worthy of a criminal sanction.
ASIC sees both types of motives, according to Inman, although there is a larger sector of people who are keen to take advantage of new communication tools and don't realise they have an obligation under the law. -A smaller sub-set of people are really just fraudsters," Inman said.
Companies that ASIC has recently taken action against include www.wealthonthe.net, whose unsolicited e-mails sought investments of US$50,000 to US$100,000. ASIC's intervention resulted in the promoter closing down the Web site. In another investigation, ASIC was concerned that a company calling itself 'OzeTrader' was operating as an unregistered managed investment scheme and engaging in misleading or deceptive conduct by offering membership to a share trading club. Through a negotiated settlement, the operator closed the share club and refunded money to investors.
ASIC said the only Federal Court action it has taken this year to date, was against Brisbane-based Alan Miller, the owner and operator of www.stocktracker.com.au. Court orders prevented him from posting any future false and misleading information on his Web site or in IRC channels. The orders also prevent Miller from giving investment advice on Web sites and on any chatrooms without holding the appropriate licence. Miller is required to remove information from his Web site and present a copy of the court orders online.
ASIC pointed out, however, that there were other investigations pending and whether or not these would include further criminal prosecutions was undecided.
ASIC has declined to reveal exactly how much of the additional AU$90 million funding that its was assigned over a three-year period in the last budget will be allocated to electronic regulation. The Commission said the funding had been bundled with additional enforcement resources, and claims the Electronic Enforcement Unit--which currently employs six people directly--is in the process of employing more analysts and investigators.
The Unit, which is regarded as a centre of expertise for the most complex matters, has also trained up about 150 people around the country, according to Inman, and works with the US-based Securities Exchange Commission on joint investigations from time-to-time.
-We have certainly taken the time to go over and learn from their circumstances," Inman said, adding that the Network Investigation Course ran by the FBI is the Unit's primary source of overseas training.
