Published September 06, 2000
The FBI recently arrested 23-year old college student Mark Jokob, former employee of Internet Wire Inc., for a hoax that resulted in $2,500 million loss to Emulex stock capitalization.
FBI agents stated that Jakob profited almost a quarter million dollars from his official-looking report that caused Emulex stock to drop almost 50% from $113 to $65 per share. NASDAQ halted trading.
Internet Wire is a widely-used and respected news distribution source about companies. Jakob’s false press-release posted on Internet Wire was a work of art, say the insiders. It mentioned that the company was revising its fourth quarter earnings estimate and hinted at a Securities and Exchange Commission investigation, adding that its chief executive had quit. The fake worked.
The hoax was compounded by intertwined agency inefficiencies and laziness. News organizations, in their haste for speed, were negligent to telephone someone who could confirm the facts.
Bloomberg News grabbed the misinformation and instantaneously disseminated it across it’s vast and influential news circuits. Not to be out-scooped, the knuckleheads at Dow Jones ran a headline confirming the false report.
Seventeen minutes later Dow Jones discovered it had been shammed, but it was too late. In the confusion that followed, the apology statement appeared to come from Emulex’s PR agency, not Dow Jones. Credibility had been trampled, and investors did not know the truth but believed the worst.
The NASDAQ exchange caused its own share of losses for investors by halting trading and then reopening at a much higher price. The unfortunate investors who had bailed out, as the stock plummeted, would have bought-in again on the upswing had the trading been uninterrupted. However, these safeguard triggers are activated for such a contingency.
Bloomberg’s attempt to regain its industry’s respect has been to explain these mistakes as commonplace, citing other hoaxes including the recent Lucent scam. The obvious missing link is personal relationships with sources and fact-checking.
Reuters, to their credit, did not report the unverifiable news. Emulex had regained most of its former loss a week later.
Sloppy business processes and the Internet’s speed fanned the hoax into an explosion. However, the consensus is that Jakob will be held responsible for everything.
More diligence, not less, is needed in this era of change. As much for sensationalistic events, consequences of our daily communications are a specter of shame. Should we also go forth spreading falsehoods to those spam-type emails that call upon us to “have a heart”?
Tearfully sad tales of youngsters-in-need continue to bombard compassionate email recipients. Who among us is untouched by sympathetic pleas for help to a mistreated or dying child or other equally compelling predicament? These fictional stories tug upon our emotions, designed to solicit complicity in their scheme to spread false information by the fist-full. The frauds are conspicuously vague, incomplete, and illogical.
Such emails and newsgroup posts are tests to our gullibility and exploitation of our unfamiliarity with the technical processes. These grandstanding con-artists are very clever to entice you, to be their agents of distribution. Being a party to their scheme can actually inflict financial damage and/or slander reputations.
Ask yourself: can all of the information be validated? If not, then delete these messages and don’t look back. They are fakes! Do not circulate them! They are unworthy of your time, and are in fact an encumbrance upon individual productivity and network bandwidth.
Most, if not all, email alerts are bogus, fraudulent hoaxes, ploys upon your good nature, from people you don’t know. The extremely rare valid ones are first aired on CNN, the nightly network news, and Larry King Live. Legitimate reporters have historically checked for accuracy before airing hearsay as truthful, recent events notwithstanding.
Look for dates, real names, telephone numbers and physical addresses in these messages. See if a valid Web URL is listed, and check it out. If conspicuously missing, then disregard it completely.
Internet technologies are not sophisticated enough—thank goodness—to universally track or tabulate the number and identity of forwarded emails. The promises of automatically receiving gift certificates, checks or anything free is as hollow as their content. Don’t be duped into the feel-good trap that you’ve done a worthwhile deed when in fact you have certainly added to the problem by participating.
The capability to email is like a mini-broadcast station to friends and associates. Our Internet-community responsibility is to validate anything that is suspicious before we send it on, if we choose to do that at all. The recipient is not obligated to do anything with a questionable message except delete it and carry on with business as usual.
See next week’s conclusion to Hoaxes, Cons and Falsehoods, part 2.