dailynews.yahoo.com
Thursday March 30 6:05 PM ET
Day Trader Busted for Posting
Bogus Lucent Release
By Gail Appleson, Law Correspondent
NEW YORK (Reuters) - A securities day-trader who
allegedly posted a bogus press release on the Internet last
week that led to a drop in the price of Lucent Technologies
Inc.'s (NYSE:LU - news) shares was arrested on Thursday
and charged with securities fraud, the U.S. attorney's office
said.
Fred Moldofsky, 43, was to be presented in federal court in
Houston, Texas, on the charges that were filed in Manhattan
federal court, prosecutors said. If convicted he faces a
possible maximum sentence of 10 years in prison and a fine of
$1 million.
The Securities and Exchange Commission also filed a related
civil suit against Moldofsky in Manhattan federal court.
The complaint said that
Moldofsky posted the
fraudulent press release, which
stated that Lucent
Technologies expected an
earnings shortfall, on a Yahoo!
Inc. message board last Wednesday night.
The day after the posting, Lucent's stock price fell by as much
as 3.6 percent, representing a reduction of more than $7.1
billion in its market capitalization, prosecutors said.
Lucent quickly assured investors it expected to meet
expectations for second-quarter earnings, dismissing rumors
that had been fueled by the fake press release.
Moldofsky, who describes himself on an Internet Web site as
a ``full-time online stock investor,' allegedly traded 6,000
shares of Lucent stock the day he issued the bogus press
release.
The complaint alleged that Moldofsky identified himself with
the screen name ``hot-like-wasabe' and sent a message
captioned ``LUCENT RELEASES EARNINGS
WARNING! DAMN!' Attached to the message was the fake
press release that was modeled after a legitimate release issued
by Lucent on Jan. 6 in which the company issued an earnings
warning with respect to the first quarter of its fiscal year 2000.
In an apparent effort to bolster belief in the legitimacy of the
press release, Moldofsky also posted numerous messages on
the Lucent bulletin board. These messages included ``links'
that allowed readers to access the fraudulent press release.
The messages were captioned with phrases like ``LUCENT
WARNS!' WE'RE ALL DOOMED TOMORROW!'
The SEC suit said that between the evening of March 22 and
the next morning, Moldofsky reposted that press release 20
times using another name ``Floydian-us,' which was designed
to resemble a screen name used by a frequent commentator on
the Lucent message board who had expressed a positive view
of Lucent stock.
Law enforcement officers were able to identify Moldofsky,
who lives in Houston, by collecting evidence from Yahoo,
America Online (NYSE:AOL - news) and Moldofsky's
Internet service provider. (snip) |
