SEC and PR Newswire in cahoots to expose the danger of fake pressreleases

WASHINGTON: The SEC wanted to leave a lasting impression on its

target audiences last week, but some PR agencies claim all the

commission did was damage the credibility of an important PR tool: the

press release.

To show how easily online investors can be fooled, the SEC set up a fake

website,, and sent out a news release announcing the

company's intention to go public. The release, sent through accomplice

PR Newswire (PRN), went to 3,500 web portals and touted the company's

expertise and attributes. When readers clicked a "buy now" button, the

scam was revealed.

But, said Kenny Fried, partner in Brotman Winter Fried, "It's hard

enough getting people to read press releases. This will make them think

twice about whether one is true or not."

Dave Armon, president of PRN Americas, defended the campaign, saying PR

people now have proof of the power of the press release. In a little

over three days, the website garnered 125,000 hits.

For some, the stunt was eerily reminiscent of the Emulex hoax two years

ago. A California man put out a fake press release on Internet Wire and

within 16 minutes, investors traded 2.3 million Emulex shares and the

price fell from $103.94 to $43, a $2.2 billion


For the campaign, PRN agreed to work with the SEC gratis

only if the disclosure media - Bloomberg, Dow Jones, and Reuters - were

aware of the plan.

John Nester, spokesperson for the SEC's office of investor education and

assistance, said the release and website did their jobs. "This was a way

to communicate the way (online investors) like to communicate - in a

non-threatening, non-authoritarian manner," said Nester. "We want to use

the same tools as the bad guys."

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