> quotes > Reuters on hoax
May 24, 2001
dispute reopens news hoax concerns
By Daniel Sorid
NEW YORK, May
24 (Reuters) - Business Wire, one of the largest distributors of
corporate announcements, has been snagged by a bitter internal conflict
at a tiny New York technology company in a dispute that rings of
the press release hoax last year involving Emulex Corp.
San Francisco-based Business Wire published a statement from Streamedia
Communications Inc., whose stock is traded on the Nasdaq for just
23 cents, declaring the ``expiration'' of its chief executive's
term and the return of its one-time chairman.
published a second release on Wednesday from the company, a Web
services provider, claiming the first release had been unauthorized
and contained ``significant misrepresentations of important facts''
The first release
was authorized by Streamedia's former chairman, Gayle Essary, and
the second by the chief executive, Henry Siegel.
On March 12,
Streamedia released a statement that said its board had terminated
Essary as director and vice president of the company, effective
March 9, ending his involvement with Streamedia.
President Larry Lokey said it has now banned the company from its
service until the power struggle between Essary and Siegel has been
settled. It is also investigating the matter, Lokey said.
But the fact
that two contradictory releases from the same source remain on the
record has troubled some experts on the media.
like there should have been a lot more security at that level,''
Sreenath Sreenivasan, a professor of new media at the Columbia University
Graduate School of Journalism, said. ``You expect it to be true
if it's on a press release.''
said Business Wire has policies in place to keep illegitimate releases
off its wire, but that it cannot, ultimately, be held responsible
for the absolute veracity of each release.
the rough news,'' he said. ``The news media then receive it and
then they verify it.''
But even a single
false press release can have brutal consequences, as the Emulex
In August of
last year, a 23-year-old college student staged one of the largest
Internet financial hoaxes by issuing a false press release over
Internet Wire, a minor player in the distribution of media releases.
The stock of
Emulex, a technology company traded on the Nasdaq, tanked after
the release was picked up by several news wires, and many investors
took major losses as a result. The student, Mark Simeon Jakob, netted
hundreds of thousands of dollars in profits.
pleaded guilty to manipulating the stock in December.
But the scandal
led to questioning about the validity of the system of issuing press
releases through third parties. News wire services and other media
outlets rely on press releases as a major source of news, and investors
regularly buy and sell stock based on a media release's statement.
In the Streamedia
dispute, the Monday press release from the company stated that Essary
``has returned'' to facilitate an ongoing merger ``following the
expiration of the term of Interim President/CEO Henry Siegel.''
That press release was written by Essary.
in a recent company filing to U.S. regulators was listed as the
CEO, said Essary lacked any authority to speak for the company in
a press release. Essary, in an interview, said he was authorized
to issue the release.
Lokey summed it up this way: ``It's the 'he said, she said' type
of thing. We are a middle man carrier.''
> quotes > Reuters on hoax