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A UK lawyer is warning that Britain is ill-equipped to fend off attack from pump and dump Internet share scams which have taken the US by storm.

Speaking to The Register, Steven Phillippsohn of solicitors Phillippsohn Crawfords Berwald said the US has the Security and Exchange Commission to monitor Internet traffic but the UK has no such guardian. "We don't have anything similar here and it makes us a picking for potential frauds on surf days," he cautioned.

In pump and dump cases shares in unknown companies prices are raised by false publicity and take-over rumours. Investors buy into these companies and then the fraudster abandons the company leaving shareholders with worthless shares.

Already there has been one case in Britain where information about a UK car company was put on bulletin boards saying the company was performing better than it was and was the subject of a take-over bid. Trading was suspended and the share price dropped to 1p. Phillippsohn would not disclose any further detail on the case. But he believes there will inevitably be more pump and dump fraud cases in the UK unless market security is tightened up.

Phillippsohn said: "The Internet is a perfect medium for attracting potential investors to pump and dump schemes. All it takes is a credible looking Web site and some links to some imaginary articles concerning the company's prospects."

However, the London Stock Exchange believes that market security is taken extremely seriously. The regulations are the same whether on the Internet or not. A representative of the London Stock Exchange said: "London has a very high standard of regulation reflected by investor's confidence in the London market. There have been no highly relevant cases and we want it to stay that way." ®

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