story appeared on Network World Fusion at
By Scott Bradner
Network World, 09/11/00
If someone wanted to demonstrate some of the challenges of getting important information via the Internet it would have been hard to do better than the recent episode involving Emulex.
For the chronically unaware, someone recently posted a forged press release from Emulex, the self-proclaimed "world's largest supplier of Fibre Channel adapters," saying the company's CEO had resigned. The release also said the company's recently reported fourth-quarter results were to be restated from a profit of 25 cents per share to a loss of 15 cents per share, and that Emulex was under investigation by the Securities and Exchange Commission. The press release was posted on the Web- and e-mail-based Internet Wire technology headline service, which I started receiving out of the blue a while back.
The Opinion which was quickly picked up by CNBC, Bloomberg, Dow Jones and other financial news outlets, did not do any good to Emulex's stock value, which proceeded to drop from $113 to $45 in the hour before trading halted. The stock recovered after the hoax was exposed, and the stock resumed trading two hours later.
As I write this, the FBI has just arrested someone for posting the press release and pocketing a quarter of a million dollars by selling the stock short. I wonder how much money was lost by others to produce this return for the perpetrator.
This was an impressive demonstration of the speed of today's communications infrastructure - 60% of a company's net worth wiped out in an hour! It was also an impressive demonstration of gullibility. For some reason, the story apparently went out on Internet Wire without being verified with Emulex.
Then other news services and analysts picked it up without questioning Emulex, the SEC or the fact that the news came from a small Internet-based news service rather than one of the established ones, which would have been a more logical outlet for news of this importance. It was more important to be first rather than accurate.
This sorry trail began with Internet Wire running the story without being positive it came from Emulex. But we have had the right digital signature technology to verify the origin of messages for a number of years. It would not be that hard for Internet Wire and other news services to insist that press releases be digitally signed before they are accepted. The software is readily available and not that hard to use.
Setting up a public-key infrastructure for this purpose would not be hard and would cost a lot less than this one incident might cost Internet Wire if the service was required to make good to the many people who lost money on this. Sad to say that there is no easy technical solution to gullibility.
Disclaimer: One hopes that gullibility is not a selected-for trait at Harvard, but sometimes one wonders. In any case, the above observation is mine alone.
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