A 23-year-old student was arrested yesterday in connection with an online fraud that saw the share price of Emulex Corp free-fall by 60 per cent last week.

Mark Jakob, a student at El Camino Community College in Redondo Beach, California, was arrested by officials at his home.

The release falsely claimed that Emulex was strapped for cash and that it was under investigation by the Securities and Exchange Commission.

The release was issued by news distribution service Internet Wire - where Jakob used to work - and reported by a string of newswire services.

The 'news' caused panic among investors who trampled on one another to jettison their shares, wiping off $2.5 billion from the value of the company.

It's alleged that Jakob was set to lose $100,000 unless Emulex's stock price fell. The authorities claim the hoax netted the student $250,000. ®