SEC 'scam' teaches investors a lesson

The Securities and Exchange Commission (SEC) received 150,000 hits over three days on a fictitious company website it set up in a bid to warn investors about internet business scams.

The site, given the name McWhortle Enterprises, offered visitors an investment opportunity with tremendous financial gains.

A press release put out to build up its initial public offering explained that McWhortle is "an established and well-known manufacturer of biological defence mechanisms". It also said that company president Thomas McWhortle III would hold a news conference at SEC headquarters.

SEC chairman Harvey Pitt, who was introduced at the news conference as Thomas McWhortle, said: "We're thrilled with the response. In a perfect world everyone would read our educational brochures before they ran into a scam, but they don't."

Pitt explained that the SEC is trying to warn investors while their guard is down. "The next time, when they encounter a real scam, these investors won't let excitement cloud their better judgement," he said.

The www.mcwhortle.com website features false testimonials from the chief financial officer of a Fortune 100 Company, a Wall Street securities analyst and a company customer. The site even features an audio interview with the 'chief executive' and 'president' of the company.

But after clicking to invest, the site proclaims: "If you responded to an investment idea like this ... you could get scammed."

The SEC spent $50 to buy the McWhortle domain name, which the group said was a low-cost, high-impact way to reach people over the internet.

The SEC also confirmed that there are at least two other fake websites out there, which it does not intend to publicly identify.

The McWhortle site was launched with the support of the National Association of Securities Dealers, the Federal Trade Commission and the North American Securities Administrators' Association.