Financial portals face SEC scrutiny

Financial portals face SEC scrutiny

The US Securities and Exchange Commission is promising to take a closer look at the activities of personal finance portals such as Yahoo and AOL to see whether they should be subject to the same regulatory restrictions as broker-dealers.

Speaking at a roundtable discussion, acting SEC chairman Laura Unger stressed that the Commission wasn't keen on extending its regulatory ambit, but said of the portals: "They're beginning to look an awful lot like broker-dealers."

With the growing complexity of the securities business and the expanding use of technology, the question of who is a broker is arising with increasing frequency, believes Unger.

The SEC is particularly concerned about the relationships between financial portals and advertisers who pay for their slots on a commission-only basis. Securities lawyers point out that online finance sites with links to featured brokers offer a compelling package of market information and a means to conduct trades - just like any other broker.

The roundtable was organised by the SEC and featured contributions from academics, legal experts, broker-dealers and the portals themselves.

John Scheibel, Yahoo's director of government relations, says: "We neither perform the functions of a broker-dealer nor do we hold ourselves out as a broker-dealer to our users."

The SEC says it will review its guidance on the activities of financial Web sites with a view to drawing up hard and fast rules delineating the relationships between portals and the brokers who feature on their Web sites.

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