SEC Aims to Check False Rumors on Wall Street

After months of urging from business, the Securities and Exchange Commission announced plans yesterday to clamp down on the rumor mill that can induce Wall Street gyrations with false information. Last week's market turbulence pushed the feds to make the move before this week's trading, the New York Times reports—but proving that false information has been spread maliciously is a tough task.

Using existing infrastructure to quash the problem without stifling normal communications is the SEC's main challenge. The spread of fake information to swing securities prices is a market mainstay, but its effects can be devastating: Last week, Lehman Brothers’ stock dropped nearly 20% before major clients rejected claims they'd abandoned the firm. (More SEC stories.)