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SEC Probes Fake Profit Warning on Yahoo

March 24, 2000|From Bloomberg News

Beware of false profit warnings.

The Securities and Exchange Commission said Thursday that it's investigating a fake earnings warning on a Yahoo Inc. message board that was designed to look like a news release from Lucent Technologies Inc.

"We are aware of the situation and are looking into it," SEC enforcement director Richard Walker said in an interview.

Lucent notified the SEC about the phony warning and contacted Yahoo to inquire about having it removed, spokesman Jeff Baum said. He declined to say whether Lucent is considering legal action.

Lucent shares (ticker symbol: LU) slid 4% before the company said it hadn't issued a warning. They rose after Lucent's statement, and ended the day up $2.63 at $65.25 on the New York Stock Exchange.

The posting is the latest piece of phony business news posted anonymously on Yahoo (YHOO), the biggest Web-navigation company and home to many of the Internet's most popular message boards for financial information. Yahoo has 120 million users around the world, giving items displayed there a potentially huge audience.

Shares of Tustin-based PairGain Technologies Inc. (PAIR), another maker of phone equipment, and Web auctioneer Bid.Com International Inc. (BIDS) surged after fake reports on Yahoo last year until the nature of the postings was learned.

The Lucent posting appeared late Wednesday and early Thursday. It was prepared to look like a PRNewswire news release.

Yahoo removed the original posting once it was contacted by Lucent and verified that the news release was false. But several copies of the same fake release were posted later. Yahoo said it doesn't monitor its message boards, but it will consider removing postings that violate its service agreement with users.

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