William H. Donaldson, chairman of the Securities and Exchange Commission, says the regulatory agency is focusing on the future as its looks for better ways to fight all types of fraud.

There are lessons to be learned in the ruins of Enron Corp. and WorldCom Inc., but Donaldson is more concerned with spotting new risks and devising ways to counter them. Those risks include fraud schemes that rely on the Internet and that can be conducted from almost anywhere in the world.

Donaldson, a retired brokerage executive who became SEC chairman in February last year, said the agency is well-equipped to meet the challenges posed by modern technology.

"I think we're on top of it," he said last month during a question-and-answer session after a speech in Fort Worth, Texas. "We've got a lot of resources working on it right now."

The SEC's Office of Internet Enforcement routinely patrols cyberspace to look for fraudulent investment offers. It also helps manage the agency's complaint center, which gets 1,200 to 1,300 tips a day.

Although the SEC brought a record number of enforcement cases last year, critics say it still is not doing enough to stop some types of fraud, such as the sale of dubious U.S. securities by unlicensed, offshore brokerages, known as "boiler rooms."

The shares are routed overseas through a securities rule known as Regulation S. It allows companies to raise money directly from foreign investors without having to go through the time and expense of a formal stock offering.

James Martin, a U.S. businessman who says he lost control of his company after agreeing to merge with another being used by a boiler room ring, thinks the only way to stop the overseas stock fraud is to scrap Regulation S or seriously restrict its use.

Martin now lives in New Zealand and runs the Securities Investigation Research Society, a nonprofit group formed by boiler room victims to help other investors determine the legitimacy of international stock offers.

The SEC contends that closer cooperation with foreign securities regulators is the key to making the global markets safer.

"We've developed, over the years, a very close and productive relationship with foreign regulators," said Paul Berger, associate director of enforcement at SEC headquarters in Washington.

The United States has cooperative agreements with regulators and law enforcement agencies in more than 30 countries, Berger said. It also cultivates information-sharing through the International Organization of Securities Commissions, he said.

That helps the SEC obtain bank records, brokerage records and other documents crucial to building cases, he said.

Despite criticism from some investors and activists, regulators in the United States are bringing more cases than ever. Boiler room cases have taken a back seat to other types of crackdowns, on everything from insider trading and accounting fraud to market manipulation and sales of unregistered securities.

The SEC filed 679 enforcement actions last year against individuals and companies suspected of violating federal securities laws, compared with 598 in 2002. Of last year's cases, nearly 30 percent involved allegations of fraud.

However, only one involved an offshore boiler room. That's because false addresses and false identities make those cases harder to develop, and because most of the schemes are conducted beyond America's borders and the agency's jurisdiction.

The National Association of Securities Dealers, the brokerage industry's self-regulatory arm, brought a record 1,352 enforcement actions last year, up from 1,271 in 2002. The group suspended or barred 830 people from the securities business, including some who were found to be working in domestic boiler rooms.

The SEC, with added funding from Congress, has boosted its staff by nearly 25 percent, Donaldson said during his speech in Texas. Morale is up, too, he said.

"I think there's a new excitement at the SEC in terms of what we're trying to do," he told the Society of American Business Editors and Writers conference.

The SEC last week took the unusual step of suspending trading in 26 inactive "shell companies'' that were delinquent in their filings. The regulatory agency was concerned that such companies could be used as vehicles for stock manipulation.

The SEC now has more than 1,000 enforcement personnel. Much of their activity, however, remains behind the scenes.

Foreign investors who have filed complaints with the SEC usually receive a standard reply that urges them to contact regulators in their own countries and directs them to additional information on the SEC's Internet site.

Those who fear that the agency is not following up on their complaints might be seeing only part of the picture, Berger said. "The nature of what we do is confidential," he said.

Whatever its shortcomings, the SEC remains the world's most effective securities regulator and represents the best hope of slowing the offshore boiler rooms, said William K. Black, a lawyer, criminologist and professor who teaches at the University of Texas in Austin.

Regulators in Britain, New Zealand and other nations - mindful of the difficulty in locating the boiler room operators and successfully prosecuting them - have focused instead on warning investors.

Many boiler rooms have operated from the Philippines and Thailand, but regulators in those countries have been less active on that front than in the past.

The Philippine Securities and Exchange Commission has not issued any cease-and-desist orders against boiler rooms for nearly three years. Thailand's securities agency, which has brought only one case since 2001, declined to comment on the boiler room problem in that country.

U.S. officials never expected Regulation S to be used so extensively for stock sales by small public companies, said J. William Hicks, a law professor at Indiana University and an expert on restricted securities and international regulation.

Hicks said he thought the SEC envisioned larger companies using Regulation S primarily to sell bonds.

Prohibiting U.S. companies from selling their stock directly to offshore buyers through Regulation S would be an extreme solution to the boiler room problem, Hicks said.

"We've titillated a lot of equity ownership throughout the world," including regions without a strong tradition of individual investment, he said. "I'd hate to throw the whole thing out just because of these abuses."

More scrutiny probably would reveal which companies and transactions are part of larger fraud schemes, Hicks said.

The SEC also should take a closer look at the middlemen in the deals, including the lawyers who issue opinions that the sales comply with Regulation S and the transfer agents who oversee the distribution of shares, Hicks said.

"The lawyers and transfer agents are critical in this whole process," he said.

The highly publicized problems at Enron, WorldCom, Tyco International Ltd. and other high-profile examples of corporate malfeasance overshadow the fact that the vast majority of American companies and executives are honest, Donaldson said.

"There are 15,000-plus (publicly traded) companies out there," he said, "most of which are very well-run by good people."