A couple of new mutual fund companies have done what could be a risky maneuver - launching a website that mentions a fund before the fund has been approved by the SEC.

Jacob Asset Management of New York, the new mutual fund firm started by Ryan Jacob, former portfolio manager of the Internet Fund, opened its website on Aug. 24, long before its Jacob Internet Fund was approved on Nov. 29.

The site had a banner with the fund's name, and it carried an announcement that said, "The site is designed to provide information and resources for investors in the Jacob Internet Fund, which is an open-end, no-load mutual fund currently in registration with the SEC." On Nov. 29 it posted a new release that announced the SEC's approval.

Valgro Funds of Chicago, another new firm, went a step further than Jacob. It started a website in November that carried the fund prospectus the firm filed wth the SEC. The fund filed with the SEC on Oct. 20, and it has not yet been approved, said Robert Allen Rintel, portfolio manager for the fund.

Rintel believes the site does not violate SEC regulations because it includes a "red herring notice" that informs those who read the prospectus that it is subject to change prior to the fund's approval, he said.

The statement includes the disclaimer, "This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State."

While he would not comment on specific fund companies, Douglas Scheidt, associate director and chief counsel for the division of investment management at the SEC, said what is put on a web site could make a firm vulnerable to a charge of "gun jumping," or promoting a security before it has been approved.

"A potential issue exists as to whether a fund in registration can provide information about the fund on a website before it is effective," Scheidt said.

Putting up a website before a fund has been approved could indeed be construed as gun jumping,' said Bibb Lamar Strench, a mutual fund lawyer with Stradley Ronon Stevens & Young, a law firm in Washington, D.C.

"It's analogous to when a company is bringing out a new fund and the marketing department is chomping at the bit to start getting out the word," Strench said. "But funds are usually careful to refrain from mentioning the fund in promotional material before its effective date. These guys are pushing the envelope by putting this information out on the worldwide web."

"I think it could very well be something to be concerned about, because there's a whole new body of law evolving around securities and investments on the Internet," said Burt Greenwald, president of BJ Greenwald Associates of Philadelphia, a mutual fund consulting firm.

"From the standpoint of investors, I would say caveat emptor," Greenwald said. "From the standpoint of the firm that's doing this, I would say they are moving dangerously close to the sidelines on this."

When it started a website, StockJungle.com of Culver City, Calif., took a "conservative approach" by not mentioning its four new funds until they were approved, said firm spokesperson Jeff Lloyd.

"We were very careful not to say anything about the funds before they were made effective," Lloyd said. StockJungle launched a website in April that focused on stock picking, but the site did not make any reference to the funds, which were under registration, Lloyd said.

The funds, which are being sold exclusively on the web, were approved on Nov. 16 and were formally announced, with a new site, on Nov. 18, he said.

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