Business Wire, a news-release service used by much of the media, said a press release about Javelin Pharmaceuticals (JAV) that was published on its service Friday, has been identified as a hoax and killed. If, like me, you feel like you've seen this movie before, you're not wrong. Just last week, the PR Newswire had to retract a fake release about General Mills (GIS).
The General Mills hoax wire was titled "Obama Orders Full Investigation of General Mills Supply Chain Following Food Recalls." The hoax that targeted Javelin Pharma, currently the target of a takeover bid by Hospira (HSP), claimed "US Supreme Court split -- rules in favor of Big Pharma." Both hoaxes are now under investigation.
The fake General Mills release had at least one clue to suggest it was a hoax: It listed former CEO Steve Sanger as the contact. Still, several headlines and stories based on the hoax appeared briefly on Dow Jones Newswire, The Wall Street Journal online, Bloomberg and Fox Business News before they were retracted and removed, the AP reported.
Regarding the Javelin hoax, the company has no pending cases before the Supreme Court, and the fake press release was false in its entirety, Javelin CEO Martin Driscoll told Dow Jones Newswire. Bloomberg, Dow Jones and Thomson Reuters all refrained from publishing the hoax release.
General Mills said it is investigating, and that law enforcement is involved. Business Wire said it referred the case to the New York bureau of the FBI.
According to Dow Jones, both releases had the same contact phone number at the bottom, a number with a New Zealand dialing code. A Dow Jones reporter called the number last week and Monday, and said the same person appeared to have answered, but gave a different name each time. It is unclear whether he is responsible for the fake releases, although he claims he was the one who sent them.
Hoaxes Slipped Through Cracks in the System
PR Newswire is a unit of United Business Media, while Business Wire is a unit of Berkshire Hathaway (BRK.A).
Both news release services say they have vetting processes, and it is unclear how the hoaxes got through those systems. Business Wire has said it will no longer accept client releases submitted by email.
Fake press releases aren't new. A famous hoax in 2000 involved Emulex: A short-seller issued a fake release stating the company's CEO was stepping down and warned about earnings. Mark Jakob, who was also a former employee of Internet Wire, was sentenced to 44 months in jail, forfeiting the gains he made through the hoax and paying an additional penalty.
In the recent cases, both hoax press releases were released at midnight, and were later retracted by any media outlets that ran them before the start of the trading session.
Small Cap Investing
Learn now to invest in small companies the right way.View Course »