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Too efficient communications

By Scott Bradner

If someone wanted to create a demonstration of a number of the challenges of getting important information via the Internet it would have been hard to put together a better one than the recent episode involving Emulex.

For the chronically unaware, someone posted a forged press release from Emulex, the self proclaimed "world's largest supplier of fibre channel adapters," saying that the Company's CEO had resigned, that its 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. In other words, the release said the company was in very deep doo doo. The press release was posted on the Internet Wire web and email-based technology headline service, which I started getting out of the blue a while back.

The news, which was quickly picked up by CNBC, Bloomberg, Dow Jones and other financial news outlets, did not do anything good to Emulex's stock value which proceeded to drop from $113 To $45 in the hour before trading was halted. The stock recovered just fine 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 it being verified with Emulex . Then the other new 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 be more logical for news of this importance. I guess it was more important to be first rather than to be accurate.

The beginning of this sorry trail is with Internet Wire's running of the story without being positive that it came from Emulex. But we have had the right digital signature technology to verify the origin or messages for a number of years. It would not be all that hard for Internet Wire and the other news services to insist that all press releases be digitally signed before they will be accepted. The software is readily available and not all that hard to use. Setting up a public key infrastructure for this purpose would not be hard and would cost a whole lost less than this one incident might cost Internet Wire if they were required to make good 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.