View Emulex Stockmarket Hoax
A US Attorney announces the arrest of Mark Jakob at a press conference held on August 31, 2000. Behind him, a chart shows the downward spike that the hoax caused in the stock price of Emulex. On August 25 2000, shareholders of Emulex Corp. were greeted in the morning by disturbing headlines that appeared on all the major wire services. The headlines read: “Emulex Announces Revised Earnings; SEC Launches Investigation Into Accounting Practices. Paul Folino Steps Down As CEO.”
The company’s stock price responded swiftly and violently to this news. It sunk from a morning high of $113.06 to a low of $43 by 10:30 a.m.
Emulex shareholders were despondent. Then more news hit the wires: Earnings weren’t being restated. The CEO had no intention of leaving. The SEC was conducting no investigation of accounting irregularities. The entire nightmare scenario of corporate meltdown spelled out in the earlier press release was nothing more than a hoax.
It turned out that the bogus news release had originated from a relatively new wire service called Internet Wire. The management of Internet Wire, confronted by the public relations disaster, immediately proclaimed their innocence, explaining that they had been the dupes of a “sophisticated” group of con-artists who, posing as a public relations firm representing Emulex, had sent the announcement to night staffers at Internet Wire. The night staffers, believing the announcement to be real, had included it in amongst the other morning press releases without checking it further.
Once the announcement appeared on the internet, the other, bigger wire services, such as Bloomberg and Business Wire, quickly picked it up and disseminated it even more widely. Apparently some staffers at these other wire services did try to verify the story, but on account of the time difference between the coasts they were unable to reach the California employees of Emulex. This gave the fake release over two hours to wreak its damage before discovery.
The following Thursday, August 31, the FBI announced an arrest in the Emulex case. The apparent perpetrator was Mark Jakob, a former Internet Wire employee. Contrary to the image of a sophisticated group of con-artists conjured up by the management of Internet Wire, Jakob was a lone 23 year-old college student who had once been an employee at Internet Wire. He reportedly made $250,000 from his scheme, although he only had one week in which to enjoy the money.
The Emulex hoax was widely proclaimed in the media as being representative of a new wave of internet-related crime. But the case itself bears the strongest resemblance not to any recent crimes, but to a crime that occurred back in 1864, the Civil War Gold Hoax.