Finance:Emulex hoax
The Emulex hoax, an instance of securities fraud, was perpetrated by 23-year-old Mark Jakob on August 24, 2000.[1]
Jakob, a former employee of the press release distribution service Internet Wire, was facing a loss of almost $100,000 as a result of short-selling stock in the Emulex Corporation, a fiber-optic equipment manufacturer.[2] To cover his losses, Jakob wrote a fake release stating that Emulex's CEO had quit and the company was restating its quarterly earnings from a profit to a loss.[3] Jakob then sent it to Internet Wire, posing as an Emulex publicist.[4]
The next morning, the phony release was picked up by Bloomberg Television and other news outlets. Emulex's stock price on the NASDAQ stock exchange dropped from $103.94 to $43.00 in only 16 minutes of morning trading, losing $2.2 billion in market capitalization.[3]
The press release was a fraudulent short and distort stock manipulation. Bloomberg picked up Jakob's fake release at around 10:13 a.m., just as Emulex, headquartered in California, was opening its doors for the day, and the stock price fell 62% before Emulex found the fake release and asked the National Association of Securities Dealers to halt trading, which it did at 10:29 a.m.[5] Once the release had been conclusively debunked, trading resumed on Emulex and the share price recovered almost immediately to close at $105.75.[3]
The FBI traced the release to Mark Jakob, who had realized a profit of more than $240,000 by shorting the stock.[2] Jakob pled guilty[2] and was sentenced to 44 months in prison,[1] forfeiting the gains and owing an additional $103,000 in penalties. Jakob's fraud cost Emulex shareholders almost $110 million.[1]
References
- ↑ 1.0 1.1 1.2 "Emulex hoaxster sentenced to 44 months" (in en). tribunedigital-chicagotribune. http://articles.chicagotribune.com/2001-08-07/business/0108070183_1_mark-jakob-emulex-wire-fraud.
- ↑ 2.0 2.1 2.2 Berenson, Alex (2000-12-29). "Guilty Plea Is Set in Internet Hoax Case Involving Emulex" (in en-US). The New York Times. ISSN 0362-4331. https://www.nytimes.com/2000/12/29/business/guilty-plea-is-set-in-internet-hoax-case-involving-emulex.html.
- ↑ 3.0 3.1 3.2 "Defendant in Emulex Hoax Sentenced": Securities and Exchange Commission, Litigation Release No. 17094, August 8, 2001.
- ↑ Irwin, Neil (2000-08-26). "Emulex Shares Plummet After Hoax" (in en-US). Washington Post. ISSN 0190-8286. https://www.washingtonpost.com/archive/business/2000/08/26/emulex-shares-plummet-after-hoax/0fd7851a-c291-47a7-93ba-b4b3e1b9b526/.
- ↑ Broadhead, Rick (2011-05-13) (in en). Dear Valued Customer: You Are a Loser: And Over 100 Other Embarrassing and Funny Stories of Technology Gone Mad. Andrews McMeel Publishing. ISBN 9781449413125. https://books.google.com/books?id=W_Mnd8Gvy1YC&dq=emulex+west+coast&pg=PT106.
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