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Friday, 1 February, 2002, 12:28 GMT
American investors 'mcwhortled'
McWhortle website
Fake website lured 150,000 visitors in three days

Have you been McWhortled?

The Securities and Exchange Commission (SEC), the equivalent of the UK's Financial Services Authority, is adopting unusual methods to educate investors about the hazards of investing online.

Don't be fooled by a pretty website. If you don't understand an investment, don't buy it

Harvey Pitt, chairman of SEC

It has set up three hoax websites which are designed to attract investors and then warn them about online investment scams.

One fake site is for McWhortle Enterprises, which purports to be a "well-known manufacturer of biological defense mechanisms" and sells a "Bio-Hazard Alert Detector"

The detector was supposedly a battery-powered device which is small enough to fit into a jacket pocket, a woman's purse or a child's backpack, which flashes and beeps when exposed to biohazards, such as anthrax.

McWhortle Enterprise's site looks like any other website, with customer testimonials, mission statements and includes an audio interview with the company president.

Apparently "Fortune 500 companies routinely use McWhortle Defense systems to protect their far-flung executives living in dangerous areas"

IPO release

In January, the SEC issued a "spoof" press release to promote McWhortle's flotation.

The press release, seemingly issued by McWhortle Enterprises, boasted that the SEC had "pre-approved" the fictitious company's flotation.

"Bio-Hazard Alert Detector" supposedly used to detect Anthrax
In reality, the SEC does not "pre-approve" flotations.

The release was distributed mainly to newswires.

Within three days, the McWhortle Website received more than 150,000 visits, but people who visited the site - some offering to give their social security numbers - were soon warned that they had been McWhortled.

A message pops up, which says: "If you responded to an investment idea like this . . . You could get scammed! An investor protection message, brought to you by: the Securities and Exchange Commission".

The Federal Trade Commission, a sister organisation of SEC, has used similar tactics to warn consumers about business scams and dodgy products for four years and now has 14 on the internet.

Australian regulators have also used similar tools to educate investors.

SEC chairman Harvey Pitt said: "Don't be fooled by a pretty website. If you don't understand an investment, don't buy it."

The SEC would not release details of the other websites.

And the UK?

BBC News Online asked the UK's FSA if it would set up similar "spoof" websites to warn investors.

A spokesman said that it was always "keen to find out what other regulators were doing", but said that internet scams were not the regulator's main focus, as they were still relatively small in the UK.

"There is a different scale involved here. In the coming year, however, we will be running trials on new software to search for scam sites on the net, " said a spokesman.

"We will then make a decision about whether to go down this route. However, from the evidence we have found this far, it suggests that these internet scams are not yet playing a huge part in this country, or people are trying but UK investors are not falling for them."

See also:

08 Jan 02 | Americas
Teen pays for alleged internet scam
07 Aug 01 | Business
US share hoaxer jailed
01 Mar 00 | Business
Online share tips warning
01 Mar 01 | Business
US moves on web fraud
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