Wednesday March 28 1:58 PM ET
Lawmakers Want SEC to Probe Corporate Spamming

By John Poirier

WASHINGTON (Reuters) - U.S. lawmakers said on Wednesday that they have asked the Securities and Exchange Commission to immediately look into corporate practices of sending unwanted ''spam'' e-mails to consumers.

Democratic Reps. John Dingell and Edward Markey made the request in a March 26 letter to acting SEC chairwoman Laura Unger. They want ``slammed shut'' a potential loophole in the privacy protections provisions of the landmark overhaul of the financial services industry under the Gramm-Leach-Bliley Act.

``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,'' Dingell and Markey wrote.

An SEC spokesman declined to comment on whether the agency plans to carry out the requests by the two members of the House Energy and Commerce Committee.

The letter to Unger preceded a meeting among the members of the House panel on Wednesday to discuss the proposed ''Unsolicited Commercial Electronic Mail Act.''

The letter includes a list of questions Dingell and Markey want answered, including the extent of the use of spam emails by broker-dealers, investment advisers, and investment companies and their representatives.

Another concern is how penny stock boiler room operations and Ponzi schemes have benefited from using spam emails.

The SEC recently conducted a broad Internet sweep of dozens of individuals and companies accused of luring and defrauding investors of millions of dollars in investment scams using the
Internet, including spam emails.

``There is no question that unsolicited commercial e-mails are a problem for millions of consumers and industry,'' Dingell and Markey said, adding that large bulk spamming is proving to be a nuisance for computer networks, local telecommunications networks, and computer users who receive them.

They are also taking issue with the stance taken by groups representing the banking, insurance, and retail industries, who say the bill will have a ``chilling effect'' on expanding electronic commerce.

``The fact that these industries are expressing such strong opposition...raises a number of interesting questions regarding current industry practices in this area,'' the lawmakers wrote to Unger. ``Specifically, we wish to know exactly what practices these firms are seeking to perpetuate.''

In a recent letter of their own to House lawmakers expressing concerns with the bill, the organizations said the bill's enforcement provision would bring lawsuits against firms that ``inadvertently'' violate parts of the legislation.

The group also said the bill would not address spamming laws that differ from state to state. ``This would be costly and confusing to consumers and further discourage electronic commerce,'' the groups wrote.

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