SANTA CLARA, CA: Extreme Networks fell prey to the posting of a
fraudulent press release in an internet chat room last week, causing
trading on its stock to be suspended.
The phony release, which was disguised to resemble a PR Newswire
release, was posted in a Yahoo! Finance chat room. Extreme was alerted
to the situation by NASDAQ, which stopped trading when it was rumored
the company would be buying Viasource Communications, a broadband
technology company based in Florida.
Viasource's stock price jumped from $0.09 to $0.18 on the
news. Extreme also rose 98 cents to $9.80. Trading resumed during
the afternoon. At press time, Viasource was trading at $0.16, and
Extreme had risen to $10.25.
Extreme reported the news to its PR firm, Voce Communications, which
immediately started working on an official statement. "The deal with
these situations is always speed," said Richard Cline, principal with
Voce.
"We were able to write a release and get it out."
While Voce and Extreme's internal PR team scrambled to find out exactly
what had happened and craft a response, they took no media calls and
relied on cell phones to communicate with each other.
The company issued a statement denying the purchase within an hour of
the alert. Viasource issued a release about four hours after the news
broke.
Following the release, Extreme gave interviews to Reuters, Dow Jones,
and Bloomberg. Voce still did not take media calls.
"The thinking in a situation like this was that it was not only
financial, but legal," Cline said. "For an agency to take the
responsibility of handling such a sensitive topic would be very
dangerous for the client."
