On August 25, 2001, investigators were looking for clues into the origins of a fake press release that had made its way across the wires. According to that hoax release, the tech company Emulex was restating its 1998 and 1999 earnings, would go from gains to losses on more previous earnings, and the company’s CEO had stepped down. The story was picked up by Bloomberg and other financial outlets and Emulex’s stock price tanked as a result. A later (real) Emulex release called the earlier announcement’s claims false.
About a week later, California college student Mark Jakob was arrested on charges of wire fraud. Ultimately, Jakob pleaded guilty to securities fraud and wire fraud and was sentenced to 44 months in prison.
The days of hoax releases aren’t over. Earlier this summer, a fake press release about General Mills was pushed out, stating that the company’s supply chain was under investigation. The matter was handled quickly, and by the next morning General Mills’ stock was unaffected, according to the Wall Street Journal. This Journal story also discusses some of the precautions that newswires like Business Wire take to ensure the releases it distributes are genuine.
[Image via DKDB]