EXPOSED ON THIS THREAD->Re: 12/26/01 - [ASW] A.C.L.N. Ltd. is Target of Questionable News Release Provided to Internet Wire
December 26, 2001
"A man named Walter Street who claimed to be a principal at Frontline Trader reportedly said to Dow Jones Newswires that the firm "generally distributes information through instant messenger - an online chat program"."
Message 16860011
To:Jeffrey S. Mitchell who wrote (2286)
From: Jeffrey S. Mitchell Thursday, Jan 3, 2002 10:50 PM
Respond to of 2287
Re: 12/26/01 - [ASW] A.C.L.N. Ltd. is Target of Questionable News Release Provided to Internet Wire
December 26, 2001
A.C.L.N. Ltd. is Target of Questionable News Release Provided to Internet Wire
On December 26, A.C.L.N. Ltd. was the target of a questionable news release provided to Internet Wire. An online research firm calling itself Frontline Trader issued the release containing an "urgent strong buy" rating on A.C.L.N. According to Dow Jones Newswires, Frontline Trader "has no discernible track record" although it described itself as "a leading provider of real-time research and analytics for institutional and professional investors worldwide". A man named Walter Street who claimed to be a principal at Frontline Trader reportedly said to Dow Jones Newswires that the firm "generally distributes information through instant messenger - an online chat program". A.C.L.N. shares spiked upwards after the press release was carried by Internet Wire. According to one newswire report, "Michael Tertin, chairman of Internet Wire, said the press release was removed by [12 noon] EST on Wednesday after Bloomberg News called to complain that the firm was not legitimate". This was not the first time that Internet Wire has removed a news release that has caused substantial movements in the price of a stock. In 2000, Mark Simeon Jakob convinced his former employer, Internet Wire, to carry a fake press release purporting to have been issued by Emulex Corp. The release falsely claimed that the company's CEO had resigned, that earnings would be restated and that the company was the target of a Securities and Exchange Commission investigation. Bloomberg News issued a news report based on the fake press release and Emulex's share price plunged, briefly shaving billions off the company's market capitalization before the hoax was revealed. At least one reputed securities class action was filed against Internet Wire and Bloomberg, L.P. as a result of their unwitting role in the Emulex Web hoax. On October 3, 2001, the Honorable Milton Pollack, Senior District Judge of the United States District Court for the Southern District of New York dismissed that action with prejudice, holding that plaintiff could not plead the requisite scienter since he had failed to allege facts to suggest that "defendants were aware of the fraudulent nature of the release" or that they intended to defraud investors. The court further rejected arguments that there were sufficient "red flags" to warn that the release was fake, saying that any disregard of such red flags "does not spell any conscious intent on the part of the publishers to commit fraud".
See:
Ellen Shang, A.C.L.N. Up -2: Co Has Not Heard of Frontline Trader, Dow Jones Newswires (Dec. 27, 2001); Phyllis Plitch, A.C.L.N. Release Renews Questions About Investor Info, Dow Jones Newswires (Dec. 27, 2001).
See also:
Blake A. Bell, Emulex Web Hoax Not the First . . . and It Certainly Won't Be the Last: Emulex Corporation Victim of Largest Web Hoax To Date simpsonthacher.com, SimpsonThacher.com (Aug. 25, 2000); Hart v. Internet Wire, Inc. and Bloomberg, L.P., Fed. Sec. L. 91,617 (S.D.N.Y., Oct. 3, 2001); Rep. Lead Report - Antifraud: News Organizations in Emulex Hoax Defeat Renewed Stock Fraud Charges, Sec. Law Daily (BNA) (Oct. 17, 2001).
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