COSTA MESA, CA: A war of words broke out last week between rival US press release distribution services in the wake of a bogus media announcement which sent one company's share price tumbling by over 60 per cent.
The FBI has arrested former Internet Wire employee Mark Jacob on suspicion of sending out a news release proclaiming the resignation of the chief executive officer of computer firm Emulex together with a profits warning.
He is alleged to have sent the release to depress the share price before allegedly trading the stock in a bid to turn a profit. The FBI accuse him of securities fraud and wire fraud.
The 'hoax' has sparked debate among staff at the wire services with market leaders PR Newswire and Business Wire swift to attack Internet Wire, a newcomer to the sector.
'It would never have happened if Internet Wire had done their job,' said BW founder and president Lorry Lokey.
Internet Wire chief executive officer Michael Terpin leapt to his company's defence: '(we can also) critique the fraudulent press release that PR Newswire put out last month on the AutoNation buyout or the April BW release from the fictional company WebNodes.'
Emulex, a Californian supplier to firms such as IBM, created a committee to handle calls from shareholders, customers and the media. Chief finance officer Michael Rockenbach returned every single call he received from hundreds of concerned shareholders.
Top financial news service Bloomberg is understood to have run the bogus release without getting confirmation from Emulex. The company's share price closed down almost pounds 5, though in one 15-minute spell its market value was slashed by 62 per cent.