Jakob, a former employee of the press release distribution service Internet Wire, was facing a loss of almost $100,000 as a result of short-seling stock in the Emulex Corporation, a fiber-optic equipment manufacturer. To cover his losses, Jakob wrote a fake release stating that Emulex's CEO had quit and the company was restating its quarterly earnings from a profit to a loss. Jakob then sent it to Internet Wire, posing as an Emulex publicist.
The next morning, the phony release was picked up by Bloomberg Television and other news outlets. Emulex's stock price on the NASDAQ stock exchange dropped from $103.94 to $43.00 in only 16 minutes of morning trading, losing $2.2 billion in market capitalization.
The press release was a fraudulent short and distort stock manipulation. Bloomberg picked up Jakob's fake release at around 10:13 a.m., just as Emulex, headquartered in California, was opening its doors for the day, and the stock price fell 62% before Emulex found the fake release and asked the National Association of Securities Dealers to halt trading, which it did at 10:29 a.m. Once the release had been conclusively debunked, trading resumed on Emulex and the share price recovered almost immediately to close at $105.75.
The FBI traced the release to Mark Jakob, who had realized a profit of more than $240,000 by shorting the stock. Jakob pled guilty and was sentenced to 44 months in prison, forfeiting the gains and owing an additional $103,000 in penalties. Jakob's fraud cost Emulex shareholders almost $110 million.
- "Emulex hoaxster sentenced to 44 months". tribunedigital-chicagotribune. Retrieved 2017-09-24.
- Berenson, Alex (2000-12-29). "Guilty Plea Is Set in Internet Hoax Case Involving Emulex". The New York Times. ISSN 0362-4331. Retrieved 2017-09-24.
- "Defendant in Emulex Hoax Sentenced": Securities and Exchange Commission, Litigation Release No. 17094, August 8, 2001.
- Irwin, Neil (2000-08-26). "Emulex Shares Plummet After Hoax". Washington Post. ISSN 0190-8286. Retrieved 2017-09-24.
- Broadhead, Rick (2011-05-13). Dear Valued Customer: You Are a Loser: And Over 100 Other Embarrassing and Funny Stories of Technology Gone Mad. Andrews McMeel Publishing. ISBN 9781449413125.