Feeds

Fake news fraud powers Pairgain stock

Quelle surprise -- it happens all the time, claim analysts

  • alert
  • submit to reddit

Bridging the IT gap between rising business demands and ageing tools

As hoaxes go, the stunt that created a run on the stock price for California-based telecoms company Pairgain Technologies is hardly anything to get worked up about. The only surprise is that such a sting, which was only mildy sophisticated by all accounts, received so much attention in the first place since this kind of thing happens all the time. Already dubbed "the most cunning Internet investing scam yet", the hoaxer went to the trouble of mocking up a Bloomberg news story alleging that Pairgain had agreed to be bought by Israel-based ECI Telecom. The fake news story was posted on a Yahoo! message board but was quickly pulled off when the scam was rumbled shortly after trading opened in New York. Unfortunately, the damage had already been done by then. Despite denials by the companies in question, PairGain's stock price rose from $8.50 to $11 before closing at $9.375. Anyone who traipses around the electronic gossip shops that litter the Net should know the Web is built on a lies and untruths. The US Securities and Exchange Commission, which is investigating this latest hoax, recently nabbed Charles O Huttoe and 12 other defendants who secretly distributed to friends and family nearly 42 million shares of a company called Systems of Excellence Inc. Huttoe then artificially drove up the share price of the company using false press releases claiming it had won non-existent multi-million dollar sales. He also announced non-existent acquisitions and revenue projections that had no basis in reality. The SEC fined Huttoe $12.5 million but he'd already spent most of his cut by the time the SEC caught up with him and he is now doing bird for his crimes. According to one analyst, this type of fraud is known as "ramping" and it's as old as the hills. "Ramping has been going on for centuries, the Internet has just made it easier," said Benjamin Ensor, a business analyst at Fletcher Research. "My advice to investors is to take every piece of information with a hefty piece of salt." Let's just hope this sound hint isn't misinterpreted by some novice investor and lead to a mass buying frenzy of salt companies and condiment manufacturers. ®

The Power of One Brief: Top reasons to choose HP BladeSystem

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.