"Net stock giveaway draws ire of SEC" Gannett News Service Janet Kornblum WASHINGTON - A company giving away stock on the Net is likely to attract more than customers. The Securities and Exchange Commission has warned others that similar stock giveaways are against federal law. Start-up exit23b has created a cyberstorm by offering to give 100,000 shares of its stock to 10 winners in a lottery. All the user has to do is register. Each time he gives the e-mail address of a "friend" to exit23b - which consists only of a Web site and a promise to go public - he gets another entry in the lottery. Needless to say, e-mail has been flying around the Net for about a month promoting the offer. But like most things on the Net that sound too good to be true, it probably is, say those who have contemplated similar offerings. Web site E-compare, a pioneer of stock giveaways, recently suspended the practice "pending clarification with the SEC." While the SEC will no officially comment on exit23b's giveaway, an SEC lawyer recently issued three separate letters to companies inquiring about the legality of such deals. The answer to all: These giveaways done without registering with the SEC violate the law. A spokesperson for exit23b was not available for comment. But the Web site states the company "intends to comply fully with all applicable" state and fedral securities regulations. Article appeared in the Business Section of the Rochester Democrat And Chronicle. Sunday, February 14, 1999.