(November 6) – “Online-stock fraud cases are up sharply, according to preliminary results tallied by the Securities and Exchange Commission,” reports Dow Jones Newswires.

” ‘We’ve seen a sharp increase in market manipulation cases,’ said SEC enforcement-division director Richard Walker. ‘It’s more than doubled.’ “

Preliminary figures show that market manipulation accounted for 8% of the roughly 500 cases the SEC brought in fiscal 2000, ended Sept. 30, up from 3% in fiscal 1999. ‘Manipulation on the Internet is where the action is,’ and appears to be replacing brokerage ‘boiler rooms’ of the past, Mr. Walker said.

“Overall, Mr. Walker said the SEC is bringing fewer cases against broker-dealers for manipulating the market, typically with ‘pump-and-dump’ schemes that artificially pump up a stock price, allowing the brokers to dump their own holdings at a profit.”

“Bad brokers of the past are being replaced by young, computer-savvy traders, including Jonathan Lebed, the New Jersey teenager who settled with the agency in September without admitting or denying allegations he manipulated stocks over the Internet. He pulled in about $800,000 in Internet transactions.”

“Internet-stock fraud cases are up sharply, based on the SEC’s initial calculations for fiscal 2000. The agency brought six Internet cases in 1995, and eight in 1996. But online fraud now accounts for far more of the SEC’s caseload, with 55 cases in 1999, and 88 cases in 2000, about 18% of all cases.”

” ‘Rapid increases in technology and the Internet have had a strong effect on our business,’ forcing the agency to pay attention to teenagers’ online chat-room discussions as well as Wall Street, the SEC’s top cop acknowledged.”