CDR: Spread misinfo, got to jail?
Blank Frank
bf at mindspring.com
Tue Sep 5 12:07:57 PDT 2000
Friday September 1 6:42 PM ET
Bloomberg, Internet Wire Sued Over
Emulex
By Nicole Volpe
NEW YORK (Reuters) - A Florida investor has filed a lawsuit
against Internet Wire and Bloomberg LP over a false press
release that led to a nosedive in the shares of Emulex Corp.
(NasdaqNM:EMLX - news) last week in one of the biggest
Web-based financial hoaxes ever, attorneys said on Friday.
The suit, filed on behalf of retiree Ron Hart and which seeks
class action status, accuses the two organizations of
allegedly
``recklessly disseminating materially false and misleading
information,'' Hartford, Conn.-based law firm Schatz & Nobel
said in a statement. Hart lost as much as $15,000 as a result
of
the hoax, said Schatz partner Andrew Schatz.
Both Internet Wire, a company announcement distribution
service, and Bloomberg, a financial information and news
company, declined to comment on the suit, which was filed in
the U.S. District Court for the Southern District of New York.
``We have not been served so we do not have a comment until
we are,'' said Internet Wire spokeswoman Amy Orebaugh on
Friday.
Bloomberg spokeswoman Chris Taylor said that as of early
Friday morning it had not been served a lawsuit and said the
company does not comment on ongoing litigation.
A false press release issued via Internet Wire and picked up
by
Bloomberg, Dow Jones and some other news organizations
caused the data networking equipment maker's stock to fall
more than 50 percent last Friday. Reuters did not carry the
hoax. The release said that the company was under
investigation
by the Securities and Exchange Commission, was about to
restate its earnings and that its chief executive had quit.
On Thursday, a 23-year-old college student was arrested and
charged with the hoax and pocketing almost $250,000 from
subsequent trading of Emulex stock.
The ``plaintiff seeks to recover damages on behalf of all
investors who sold Emulex stock or call options or purchased
put options on August 25, 2000 before the resumption of
trading
at 1:30 p.m. EST,'' Schatz & Nobel said in a statement.
Schatz said other investors had contacted him and he expected
that some of them would join in the suit.
Hart had about 500 Emulex shares and sold them at about $80
each in the middle of the share price plunge, which reversed
as
soon as the hoax was revealed, said Andrew Schatz. The
company's shares, which fell to $48-1/16 on August 25 before
trading was suspended, have since recovered to close at
107-1/2
on Friday.
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