LOS ANGELES: Thomas Hughes, CEO of eConnect, was indicted late last month on charges that he attempted to increase his company's stock price by distributing false press releases.
PR Newswire, the long-standing distributor of eConnect announcements, unwittingly sent out a false release that said $20 million in asset-backed corporate bonds had been transferred to the e-commerce company.
David Armon, president of the Americas for PR Newswire, dispelled any notion of wrongdoing by his firm, saying the release was distributed because it was verified through PR Newswire's security measures as coming directly from the corporation. "Just as we sent out releases for Enron, WorldCom, and Tyco, this one went out because our job is to verify the company issuing the release is really the company issuing it. We are just a distributor," he said.
An increased focus on credibility in corporations - coupled with two incidents of Internet Wire (IW) issuing phony releases (one earlier this year about Cel-Sci and another in 2000 about Emulex) - has put the spotlight on newswire services.
Jim McGovern, CEO of IW, acknowledged this situation's part in the larger issue of newswire security measures. "This is still a breach of wire-service integrity. It is another example of the extra steps necessary to ensure that only legitimate releases are being distributed."