SEC FILES FIRST SUIT ON NET STOCK FRAUD.

Byline: The New York Times

Cynics who suspect that the real Internet ``revolution'' has been in the area of stock fraud got some ammunition Thursday, when federal regulators brought what appears to be their first lawsuit to stop securities manipulation over the Net.

At the request of the Securities and Exchange Commission, a federal judge in Washington agreed to freeze the assets of Charles O. Huttoe, the chairman of a little company called Systems of Excellence, known to its devotees as SEXI because of its stock ticker symbol. The freeze, which the SEC says is likely to go into effect today, will also apply to the proprietors of an electronic newsletter called SGA Goldstar, which was distributed over the Internet and through stock quotation services.

U.S. District Judge Gladys Kessler also agreed to impose a temporary restraining order, said Erich T. Schwartz, a lawyer for the commission. A hearing is slated for Nov. 21. The SEC complains, among other things, that SGA's owners touted Systems of Excellence in return for secret, illegal shares in the company, which they dumped once the stock price skyrocketed in late May and early June (it topped $4.75 on June 10, up from about 25 cents at the beginning of the year; now it is back below 50 cents a share).