The Internet has always been a haven for phony stock touters and financial
scamsters, but it’s not every day that investors have to be wary of hoaxes
staged by the Securities and Exchange Commission.
And yet that’s exactly what happened as the federal securities watchdog admitted to setting
up an online “scam” involving a fictitious company called McWhortle
Enterprises Inc. that purportedly markets a handheld biohazard detector
“guaranteed to beep and flash in the presence of anthrax or other deadly
germs.”
There’s no such product, and no such company, and the SEC said the whole
thing was an effort to warn consumers about the risks of online investing.
The McWhortle Web site was still up in early
afternoon, complete with a picture of the fake device and text that claims
the thing “works by detecting microscopic levels of hazardous bio-organisms.”
The site includes links to other pages that encourage consumers to invest,
claiming that “those lucky few who are able to invest early will see the
value of their investment increase by many multiples overnight.” But the
final page says: “If you responded to an investment idea like this . . . You
could get scammed!”
The SEC had some lofty company in this consumer education effort. The site
says that McWhortle “is a complete fabrication, posted by the Securities and
Exchange Commission, the Federal Trade Commission, the North American
Securities Administrators Association, and the National Association of
Securities Dealers to alert investors to potential online frauds.”
Even PR Newswire helped by distributing a fictitious news release to Web
sites and online databases. PR Newswire Americas President David Armon said
that the McWhortle site received 120,000 hits in the first two days after the
SEC issued the release on Jan. 25.
The SEC also said there are at least two other such fake Web sites out there.
Officials from the SEC and the other agencies involved were quoted as saying
they had no ethical problems with using a hoax to educate consumers. “In a
perfect world, everyone would read our educational brochures before they ran
into a scam, but they don’t,” SEC Chairman Harvey Pitt said in a government press
statement describing the effort.
Since the recent anthrax-by-mail scare, the FTC says it has warned more than
100 Web site operators to stop making unproven claims about devices for
bioterrorism protection.
