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Hoax press release fools financial websites

Posted: 31/08/00 By: Colin Meek
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Some of America's biggest financial media organisations were left reeling this month after falling victim to a carefully planned hoax that led to the share price of a leading technology company plunge by 60%.

E&P online reported that Bloomberg News, Dow Jones News Service, CBS.MarketWatch.com and TheStreet.com all fell for the hoax in the form of a false press release.

The release stated that the fibre-optic company Emulex was issuing 'revised earnings' and that the Securities and Exchange Commission had launched an investigation into accounting practices at the firm.

Trading in the firm's shares was suspended by the Nasdaq stock market and, after the hoax was revealed and denials issued by the company, the company regained most of the collapse in its share price.

Writing about the affair this month, TheStreet.com co-founder James Cramer said news services had failed to check the accuracy of the release in their rush to be first with the news.

Some information contained in the release was 'gibberish' he said, but the initial wording and unemotional and dispassionate tone had convinced the site that Emulex had 'imploded and would now disappear as a force and as a stock'.

As a manager of a hedge fund who also writes a column about the dynamics of money management, Cramer had a lot to lose.

'This event captivated my firm. It felt like we were having a day at the beach when suddenly this wave came up and over our heads. We were staggered by it because we traffic in the Emulexes.'

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