FC: House Democrats ask SEC to investigate financial spam

[Declan McCullagh <declan () well com>]

Also see this:
http://www.house.gov/commerce_democrats/press/spamming.ltr.pdf

-Declan

**********

http://www.house.gov/commerce_democrats/press/107ltr28.htm
   
   March 26, 2001
    
   The Honorable Laura Unger
   Acting Chairman
   Securities and Exchange Commission
   450 Fifth Street, N.W.
   Washington, D.C. 20549
   
   Dear Ms. Unger:
   
   We are writing with respect to H.R. 718, the "Unsolicited Electronic
   Mail Act of 2001," which was approved by the Committee on Energy and
   Commerce's Subcommittee on Telecommunications and the Internet
   Subcommittee. We received a March 20, 2001, letter from several
   organizations and companies in the financial services industry
   expressing their strong opposition to this bill (a copy of this letter
   is enclosed).
   
   There is no question that unsolicited commercial e-mails are a problem
   for millions of consumers and for industry. In particular, large bulk
   spamming is clogging computer networks and is a burden to local
   telecommunications networks, as well as a nuisance to the computer
   users who receive them. We all recognize that any legislation
   regulating the Internet and commerce on the Internet is something we
   need to do cognizant of the special characteristics of the Internet as
   a medium for commerce but also as a medium for free speech.
   
   Part of the wonder of the Internet is its wide open, chaotic nature
   that allows individuals to freely communicate with others and to
   challenge the established order. And although this speech sometimes
   causes consternation, we recognize that regulating speech -- even
   commercial speech -- is a most serious issue. We believe that the
   Subcommittee has done much to work through these difficult issues and
   that the bill approved last week reflects an improvement over last
   year's legislation.
   
   We must note, however, that resolving the industry's concerns stated
   in this letter would completely gut the bill's principal provisions.
   The fact that these industries are expressing such strong opposition
   to legislation restricting unsolicited "spam" e-mails, raises a number
   of interesting questions regarding current industry practices in this
   area, which we wish to better evaluate. Specifically, we wish to know
   exactly what practices these firms are seeking to perpetuate, and
   whether such practices are consistent with the purposes of the bill.
   
   In order to better understand financial services industry e-mail
   spamming practices, we request that the Commission initiate an
   immediate investigation into securities industry use of unsolicited
   "spam" e-mails. We request that this investigation answer the
   following questions:
    1. How common and pervasive is the use of "spam" e-mails by
       broker-dealers, investment advisers, and investment companies and
       their representatives?
    2. To what extent have penny stock boiler room operations, Ponzi
       scheme operators, and other flim-flam artists begun making use of
       unsolicited "spam" e-mails to identify and fleece their victims?
    3. Are investment recommendations or investment advice ever made in
       such spam e-mails? If so, are such recommendations or advice
       subject to the suitability rules promulgated pursuant to the
       Federal securities laws?
    4. Has the SEC or the self-regulatory organizations included any
       examination of securities industry spamming practices in their
       examinations of securities firms? If not, why not? If so, what has
       the SEC and the SROs found in such examinations?
    5. How do broker-dealers, investment advisers, or other securities
       professionals determine whether the advice or recommendations they
       are making in "spam" e-mails are in fact suitable for the
       recipients of these e-mails?
    6. How does the securities industry obtain the e-mail addresses to
       which they send unsolicited "spam" e-mails?
    7. To what extent are e-mail addresses that have been obtained from
       various affiliates of a financial services holding company used
       for spam e-mails?
    8. Are e-mail addresses personal, nonpublic information under the
       Gramm-Leach-Bliley Act? If not, why not? If so, what steps is the
       industry taking to assure that such addresses are afforded the
       privacy protections of the Act?
    9. Does the securities industry ever make use of so-called "web bugs"
       in the spam e-mails they send out? If so, what information is
       being collected using such "web bugs?"
   10. Does the securities industry ever make use of "web bugs" at their
       web sites or in banner advertisements they place on other web
       sites? If so, what information is being collected about Internet
       users using such "web bugs?" How is this information being used?
       
   Thank you for your assistance and cooperation in responding to this
   request. Should you have any questions about this inquiry, please
   contact us or have your staff contact Mr. Jeff Duncan (Rep. Markey) at
   202-225-2836 or Ms. Consuela Washington (Committee Minority Staff) at
   202-225-3641.
   
   Sincerely,
   
   John D. Dingell
   Ranking Member
   Committee on Energy and Commerce
   
   Edward J. Markey
   Ranking Member
   Subcommittee on Telecommunications
   and the Internet
   
   Enclosure
   
   cc: The Honorable W. J. "Billy" Tauzin, Chairman
   Committee on Energy and Commerce
   
   The Honorable Fred Upton, Chairman
   Subcommittee on Telecommunications and the Internet
   
###



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