America Online Says Internet Posting on Bid.Com Venture Is Hoax
America Online Says Internet Posting on Bid.Com Venture Is Hoax
Washington, July 8 (Bloomberg) -- America Online Inc. said an Internet posting, which appeared to be an announcement about a strategic alliance with Canadian online auctioneer Bid.Com International Inc., was a hoax. ''This posting is a fraud, a hoax, it's false,'' said Richard D'Amato, a spokesman for Dulles, Virginia-based AOL, the No. 1 online service provider.
AOL, which trades on the New York Stock Exchange, notified NYSE officials after learning of the fake announcement, said another company spokesman, Jim Whitney. The company doesn't know who was responsible for the bogus release, he said.
The posting, which appeared on a Yahoo Inc. bulletin board today, was written to look like a PR Newswire Inc. release. Carrying a dateline of Toronto, the phony announcement quoted AOL as saying it signed a four-year, $89 million alliance with Bid.Com.
The fake press release duplicated almost verbatim a Reuters news agency story from Tuesday about AOL's $89 million strategic alliance with drkoop.com Inc., an online health information provider. The bulletin board posting substituted Bid.Com's name where drkoop.com had been mentioned in the Tuesday news story.
The fake announcement, which appeared at about 12:53 p.m. New York time, was retracted about 35 minutes later by a bulletin board user with the Internet moniker of ''Jag 98.'' ''Sorry guys about the post, that news was something I hope will happen . . . Sorry again guys, just letting some steam out,'' Jag98 wrote on the Yahoo message board.
After trading around 8 1/2 just before 1 p.m. New York time, Bid.Com's shares rose to as much as 9 in a little more than an hour. The modest surge continued even after Jag98 issued the retraction. ''This is obviously a fraudulent release that we didn't issue,'' said Claudine Cornelis, an outside spokeswoman for Bid.Com.
By day's end, Bid.Com shares had risen 9/16 to close at 8 17/32.
Bid.Com's volume, which had averaged 154,000 shares per hour between 9:30 and 11:30 a.m. surged to more than 957,200 shares between 12:30 and 1:30 p.m. New York time, and to more than 1 million shares between 1:30 and 2:30.
Bid.Com, which trades on the Nasdaq Stock Market, contacted Nasdaq after learning of the hoax, Cornelis said. Nasdaq executives told the company that it didn't need to put out an announcement, she said. A Nasdaq spokesman had no immediate comment.
An Securities and Exchange Commission spokesman declined to say whether the federal agency is investigating the matter. A spokesman for PR Newswire Inc., a unit of United News & Media Plc in London, said he wasn't aware of the fake announcement.
Today's hoax follows an April incident involving former PairGain Technologies Inc. engineer Gary Hoke, who has pleaded guilty to charges that he posted a fake Internet news story saying PairGain was being acquired by an Israeli rival.
Hoke was indicted by a Los Angeles federal grand jury for securities fraud on allegations he tried to manipulate PairGain stock by creating a fake report that resembled a Bloomberg News story. He also was charged with civil securities fraud by the SEC.
Some Yahoo users today quickly spotted the announcement as a fake and sent cautionary messages to user Jag 98. ''There was a guy arrested recently for pulling the exact same stunt with a Bloomberg release,'' one bulletin board user wrote at 12:57 p.m., four minutes after the fake announcement was posted. ''See you when you get out of prison.''
NYSE/AMEX delayed 20 min. NASDAQ delayed 15 min.
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