Personal finance: Internet Investor

SOME FANCIFUL souls have likened the Internet to a gold rush in the Wild West. A cattle stampede might be a more accurate analogy. But while we may argue about descriptions, there is no disagreement about the fact that financial regulation is lagging behind technological development.

The Treasury's consultation document issued last month on financial promotion sets out, in part, to redress the balance. The current regime asserts jurisdiction over every website accessible in the UK containing advertisements relating to investments or investment services.

However, before the Financial Services Authority (FSA) sets out to take on the world it has set itself a series of guidance factors on whether to take enforcement action.

Among these self-imposed hurdles are whether the website is located in the UK; the extent to which the underlying service is available to UK investors and, perhaps most importantly, the extent to which the advert is directed at persons in the UK.

The suggestion is that there should be "an exemption from the financial promotion regime for promotions issued from overseas, which, although available in the UK, are not `directed at' the UK". Quite how you go about defining.

The bottom line is this and is admitted as such: "UK investors who visit overseas Web sites which promote stocks on various international securities markets might not be protected under UK law."

One other point. We are constantly told to check the small print. Be warned: in future the small print may not actually appear on Web advertisementS.

The consultation document says on this subject: "All promotional material must contain all the relevant information or be clearly connected to such information." This seems an open invitation to put all the worrisome warnings on another page that people may not bother to view.

Now let us move on. Global Investor is running a competition inviting you to predict the share price of Amazon.com on 30 April. First prize is a balloon flight with a champagne breakfast, plus $1,000 worth of investment tools.

You have until midnight on 23 April to enter. Here are a few pointers: last year Amazon lost $124 million, up from $31 million in 1997; its share price has climbed from $13 a year ago to a peak of $199 in January 1999 before slipping back.

The first 100 runners-up will receive a copy of Extraordinary Popular Delusions and the Madness of Crowds, by Charles Mackay, and a bright red panic button for their computer keyboard.

The book,written in 1841, remains the definitive work on money manias. The button has no real function, but, for investors who fail to anticipate the inevitable correction in Internet stock prices, it will be as effective as any other action!

HM Treasury:

www.hm-treasury.gov.uk

Global Investor: www.global-investor.com/bookshop/comp/hot-air.htm

Robin can be reached at RobinAmlot@aol.com