ASIC Targets Investment Chat Rooms

[Sydney, AUSTRALIA] The Australian Securities and Investments
Commission
(ASIC) has proposed a number of regulations in an attempt to
control online investment chat rooms.

The proposed policy framework is designed to protect investors using Internet
Discussion Sites (IDS) by regulating Web-based bulletin boards where individuals
post information about investment products and services.

In an Exposure Draft released today, ASIC maintained that a licence should not be
needed to run a facility that only allows ordinary investors to swap information and
chat, but that this would apply only if the site was “not likely to lead investors to
mistake it for professional advice.”

“ASIC is seeking to strike a balance between allowing people to communicate
freely with each other, inform themselves about security and minimizing the risk that
sites may be used to manipulate markets, trade on insider information or take
advantage of less well-informed investors,” said ASIC Commissioner Jillian
Segal.

ASIC will also require IDS’ to display prominent warnings before users can
participate in the discussions, designed to make people understand the kind of
information they are receiving on the site.

“The sorts of warnings we suggest include that the IDS itself does not endorse or
vouch for the accuracy of the postings, a statement that the postings are general
information and a declaration that people who post information will be individually
responsible for their authenticity and accuracy,” Ms Segal said.

ASIC is further encouraging these sites link to their watchdog page so users can
verify the information they are provided with.

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