CDR: Spread misinfo, got to jail?
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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