Blog blunder : Nothing new

One of my favorite tech blogs fell flat on its face Wednesday. Engadget posted a story yesterday claiming the expected June launch of the iPhone would be delayed until October and the Leopard October debut would be postponed until January. Engadget's credited its source as coming from an internal Apple e-mail.

The e-mail tip turned out to be false. But before anyone figured this out Apple's stock tumbled 3 percent losing $4 billion in value by the end of the trading day.

Apple reacted quickly and issued a statement saying that the iPhone and Leopard are both still on track -- the iPhone will ship at the end of June, and Leopard will ship in October. Engadget quickly posted a correction.

Here is Engadget's original blog post accompanied by Engadget co-founder Ryan Block correction.

Stock Manipulation Via Fake News –- Nothing New

I agree with others that speculate Engadget was played by a trader who knew that this story would have a negative impact on Apple stock. My guess is they used this rumor to short Apple stock and mint a fortune.

Blog bashers will point to Engadget's flub for years to come. But it's important to remember "traditional" media has fallen for similar chicanery before to.

In 2000 Emulex, a networking firm, saw its stock take a nosedive from a morning high of $113.06 to a low of $43 by lunch time. What prompted the stock to drop was headlines that appeared on major wire service proclaiming: "Emulex Announces Revised Earnings; SEC Launches Investigation Into Accounting Practices. Paul Folino Steps Down As CEO."

The story was fake. It was planted by a then 23-year-old Mark Jakob, a former employee of a wire service called Internet Wire. The story was planted by Jakob on the wire and it was picked up by major news outlets as real. The FBI investigated and arrested Jakob. Published reports say Jakob made $250,000 from his scheme, money he later had to return.

If the Apple/Engadget incident is a case of stock manipulation than this is a coming-of-age moment for Wall Street miscreants who target blogs. The success found with dropping Apple stock will only fuel the cottage industry of manipulating stock prices through e-mail, message boards, and blogs. With Engadget the scammer(s) landed a big fish. You better believe they are thinking about a new stock/blog target right now.

Penny Stock Spam Scam

Stock manipulators have been steadily pounding away at our inboxes with their penny stock tips. Yes, they’ve found success there.

People behind the spam stock scam typically buy a bunch of penny stock in a company. Next, they send out millions of spam messages touting that stock--typically via zombie computers (owned by home PC users). When enough people buy the stock--and believe it or not, some people actually do--the spammers sell their holdings and make a modest return.

How many people actually fall victim to these stock tips? A spammer can make a 5 to 6 percent return in just a few days from stock hyped via spam, according to a recent study conducted by researchers at Oxford University and Purdue University. The researchers also found that spam recipients who invest in those same stocks lose about 7 percent of their investment.

In March the U.S. Securities and Exchange Commission (SEC) suspended trading for 35 companies that allegedly benefited from spam e-mail campaigns to hype their stocks.

Source : blogs.pcworld.com