|SEC warned off financial portals|
Agency has questioned whether it should regulate the sites
By Brock N. Meeks
WASHINGTON, June 13 — The Securities and Exchange Commission shouldn’t regulate Internet-based financial portals, House Commerce Committee Chairman W.J. “Billy” Tauzin, R-La., told the SEC’s acting chairman in a strongly worded letter. In fact, the agency shouldn’t have been thinking about it in the first place, Tauzin said.
“INTERNET PORTALS DO NOT fall within the jurisdiction of the SEC,” Tauzin’s June 12 letter says. “Absent direction from Congress, there is no basis for the SEC to extend regulation to Internet portals.”
The letter comes on the heels of a day-long hearing the SEC held May 23 looking into the issue of whether these financial portals need regulatory oversight. Because the portals receive financial compensation for directing Web surfers to certain online brokers and because those same portals provide investor information, the SEC wondered whether such deals rose to the level of a broker-dealer relationship.
“The SEC has had a regrettable tradition of attempting to regulate in areas over which it lacked jurisdiction,” Tauzin wrote SEC acting chairwoman Laura Unger. “Internet portals should not become part of this tradition.”
Tauzin noted that financial portals are merely “passive vehicles that aggregate and make investment-related information available to their users. Portals do not recommend specific securities. Nor do they take action involving brokerage accounts or securities transactions.”
Internet-based financial portals typically provide investors news, stock quotes and other financial information free of charge. Advertising, typically from online brokerages, supports those services.
“Just as online brokers are subject to the same regulatory regime as traditional brokers, Internet-based financial Web sites should be treated no differently than traditional counterparts in print, television and radio media,” Tauzin’s letter says. “The SEC needs to be careful not to create the impression that it is considering regulation of Internet portals.”
Yahoo’s director of government relations, John Scheibel, speaking at the SEC conference, said: “We believe that allowing for flexibility in these relationships is consistent with protecting the interests of consumers. We do not believe that it would be appropriate to regulate Internet portals as broker-dealers.”
But Tauzin may have been wasting his ammo. Unger, whose replacement, Harvey Pitt, has already been nominated and is awaiting confirmation hearings, said at the May 23 conference that she would be hesitant to commit her already overworked and understaffed agency to carving out a regulatory framework for financial portals.