Net Investor Hoax Probed

Lycos Inc. officials report they will be subpoenaed for information on the hoaxster who used a company site Wednesday to post a bogus Web page touting the fictitious sale of a California telecom company.

But computer fraud experts aren't optimistic the federal and state probe will catch the perpetrator.

Lycos (LCOS) spokesman Brian Payea told CBS.MarketWatch.com that the company had been informed by the Securities and Exchange Commission and the New York State's Attorney's office that it would soon be served with a subpoena targeting the creator of the Web page. The page on Angelfire.com, a Lycos-operated Web site that allows users to create their own Web pages, mimicked the look and feel of the Bloomberg.com Web site.

The bogus news story said PairGain Technology (PAIR), a Tustin, Calif.-based telecom firm, had agreed to be acquired by Israel's ECI Telecom Ltd. Shares of PairGain soared as much as 31 percent Wednesday, before giving up some of the gains after PairGain denied the acquisition. A message posted on a Yahoo stock chat message board linked to the bogus page. Soon links to the page were posted on numerous other Internet sites.

Angelfire.com users are required to provide personal data when they sign on to the site, but Payea noted there is no guarantee that users submit accurate or truthful information.

Winn Schwartau, a Florida-based author and computer security consultant who runs the infowar.com Web site, said catching the perpetrator may prove difficult - especially if the culprit was working through an anonymizer, which would mask the user's identity.

An SEC spokesman said by policy the commission doesn't confirm or deny the existence of any investigation.

Lycos took down the bogus Web page Wednesday after being contacted by a Bloomberg attorney and determining that the page was fake. Payea said it is Lycos' policy, as required by privacy laws, not to divulge any individual information regarding site users unless served with a subpoena.

While the SEC refused to comment on the case, a spokesman on Wednesday did note that the commission has repeatedly warned investors to be wary of bogus information.

"Generally, we've been telling investors for months that they shouldn't be basing investment decisions solely on what they read on the Internet," said SEC spokesman Duncan King.

Written By William L. Watts, CBS MarketWatch