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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