Online Fraud Is Probably Easier to Spot

“For Investors, the Internet Has Promise, Perils” (June 3) focuses primarily on the perils, not the promise of the Internet.

In fact, the Internet is making it possible for small companies to raise capital--without being shunned by Wall Street, which primarily concentrates on medium to large companies.

True, there is potential for fraud with small companies. But this is always a concern in securities markets. Interestingly enough, fraud may be more difficult to achieve in the online world. After all, when you post a message on a chat room or on your company Web site, the whole world can see it--including the Securities and Exchange Commission. If you place the same message in the traditional mailbox, only a few people will see the fraud. This is especially the case with small companies, which do not have much exposure.

In fact, in the case of Comparator, the hype was extremely blatant. There were thousands of messages coursing through America Online as the stock soared from $36 million to $1 billion in several days.

Obviously, there was something wrong happening and it could not have been more obvious to the SEC. Would the SEC have found out about this company if there wasn’t this hype on AOL?

TOM TAULLI

Monrovia