YOU ARE HERE: LAT HomeCollections

Markets / Your Money

Two Stocks Halted After Fake Report

Trading: A false news release says Extreme Networks offered to acquire Viasource Communications.

October 09, 2001|From Bloomberg News

Trading in Extreme Networks Inc. and Viasource Communications Inc. was halted for about two hours Monday after a fake news release saying Extreme offered to buy Viasource was published on the Internet.

The message was posted to Yahoo Inc.'s Viasource bulletin board by an anonymous user. The phony release was made up to look as if it came from PR Newswire and was dated Oct. 9.

Yahoo deleted the message after being contacted by PR Newswire, which distributes news releases.

The six-sentence release said Extreme, a maker of computer-network switches, "announced today a cash tender offer" for Viasource at 92 cents a share. The release didn't quote any officials.

"It is completely false," said Valerie Bellofatto, a spokeswoman for Santa Clara, Calif.-based Extreme.

Shares of Viasource, which installs and maintains wiring and equipment for cable-television and telecommunications companies, rose as high as 22 cents on Nasdaq before the halt at 11:28 a.m. EDT.

When trading resumed the stock (ticker symbol: VVVV) then fell back. It closed at 13 cents, up 4 cents for the day in heavy trading.

Extreme shares (EXTR) rose 95 cents to $9.80 before trading was halted at 11:35 a.m. When trading resumed the stock shot as high as $10.45, then fell back to close at $9.23, up 38 cents for the day.

Viasource, in Fort Lauderdale, Fla., said it didn't know who posted the false release.

Federal officials in recent years have investigated a number of stock hoaxes involving false information disseminated over the Net.

In August, a judge sentenced a former community college student to 44 months in prison for fabricating a news release last year that sent shares of data-storage equipment maker Emulex Corp. plunging for a few hours.

In March, a jury convicted a Texas day trader of fraud for posting phony profit forecasts for Lucent Technologies on Yahoo.

Los Angeles Times Articles