Cultural Critique

Introduction: You Have Been McWhortled!

Appearing for the first time four months after the terrorist attacks of 9/11, the Web site of McWhortle Enterprises¹ publicized the launch of the Bio-Hazard Alert Detector. The Detector, which "is small enough to slip into a man's jacket pocket, a woman's purse or child's backpack," was the first product offered by the company to "the general public." Based upon McWortle's experience of providing "defense systems" to the "far-flung executives" of "Fortune 500 companies," the Detector works by sensing "microscopic levels of hazardous bio-organisms and deadly virus organisms." Owners of a Detector can have considerable "peace of mind," safe in the knowledge that it "emits an audible beep and flashes when in the presence of all known bio-hazards." The huge potential market for the Detector and McWhortle's previous success—as evidenced on its Web site by customer testimonials and an audio interview with its president Thomas J. McWhortle III—led the company to announce an initial public offering (IPO) in a press release of January 25, 2002.² While McWhortle's stated intention was to file its Registration Statement with the U.S. Securities and Exchange Commission (SEC) five days later in order to enact the IPO, the press release also stressed that "The SEC has advised us that they have 'pre-approved' our IPO because the nation needs a product like this on the market as quickly as possible to protect Americans from terrorism." Those who responded to the press release by trying to invest in McWhortle through the "invest now" section of its Web site were told that the IPO was presubscribed but that stage 2 bidding was still available. However, those who passed through the portal and attempted to participate in stage 2 bidding [End Page 67] were met with the following message: "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."

McWhortle Enterprises was one of several hoax investment opportunities created as part of an ongoing campaign by the SEC's Office of Investor Education and Assistance. More recent SEC scam sites include a mutual fund called "Old Glory," a hedge fund called "Guaranteed Returns Diversified, Inc.," and an investment newsletter called "Seek to Succeed" that features links to a range of spurious investment vehicles.³ For the savvy investor, there were limited but highly visible clues that indicated that McWhortle was a sting—for example, the SEC does not "pre-approve" IPOs. Nevertheless, of the 150,000 visitors to McWhortle's Web site in the three days following the press release, a good number were McWhortled and clicked the "invest now" option. By January 30, the SEC admitted to the hoax, and SEC Chairman Harvey L. Pitt explained, "What we're trying to do is 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 judgment."⁴

It is the attempt to produce "better judgment" by existing and would-be investors that lies at the heart of not only McWhortle and the other SEC scam sites, but a wider set of policies and initiatives that are currently being undertaken on both sides of the Atlantic in the name of "financial literacy" and "financial education." For existing investors, the SEC also provides, for example, a range of brochures and pamphlets, a toll-free telephone line, individual assistance by e-mail, and an interactive Web site.⁵ New investors are also targeted, whether in terms of extending pensions provision⁶ or, perhaps most disquieting, in terms of initiatives undertaken in schools such as the No Child Left Behind Act of 2001 and Jump$tart in the United States, and the Personal Finance Education Group's (PFEG) work in the United Kingdom. Overall strategic leadership on financial literacy is provided in the United Kingdom by the Financial Services Authority (FSA), which, formed in 2000, enacts statutory duties that commit the regulatory body to promote public understanding of the financial system. Meanwhile...