Internet Wire Increasing Security Following Hoax

[William Knowles <wk () C4I ORG>]

http://ap.tbo.com/ap/breaking/MGI0P7GQGCC.html

Aug 28, 2000

By Seth Sutel
The Associated Press

NEW YORK (AP) - Internet Wire is beefing up its security procedures
after a bogus press release sent through its service last week sent
the shares of a network equipment manufacturer plunging.  Mike Terpin,
the CEO of Internet Wire, said Monday that more thorough checks will
be made of all press releases submitted through Internet Wire,
especially those submitted overnight.

The hoax was pulled off Friday by someone who sent out a fake press
release with bad news about Emulex, a successful California company
that makes fiber optics equipment. The fake release said the company's
CEO had quit and that it was restating its most recent quarterly
earnings from a profit to a loss.

Emulex's stock plunged as much as 62 percent in the minutes after
financial news services ran stories based on the fake release, but the
stock recovered most of its ground after the company denied the
reports. The FBI is investigating the matter.

The release was submitted overnight, when a skeleton staff works at
Internet Wire, and Terpin said the perpetrator convinced the overnight
staff that all the necessary checks had been made. Terpin said this
was the first time his company was fooled into putting out a
fraudulent release.

"We got tricked," Terpin said. "A very sophisticated criminal was able
to pull off a fraud against us. ... It took a lot of homework on their
part to pull this off, but that's a loophole we intend to close
immediately."

Internet Wire was founded six years ago in Los Angeles to compete with
two well-established distributors of press releases, Business Wire and
PR Newswire. Terpin said he founded Internet Wire on the premise that
it could offer similar services more cheaply by relying only on the
Internet for distribution instead of satellite and other means.

Officials at Business Wire and PR Newswire expressed concern that
their companies - founded in 1961 and 1954, respectively - might be
aversely affected by the negative publicity surrounding the incident.

"I don't want to be tarred by the Internet Wire brush. For us, it's a
pretty serious matter," said PR Newswire CEO Charlie Morin. Morin said
his company was meeting this week with media outlets to reassure them
about their own procedures for authenticating the origin of press
releases.

Lorry Lokey, president of Business Wire, said his company rejects a
few press releases every week from what appear to be investors touting
a stock or other dubious sources.

Lokey said he's not aware of his service ever running a fraudulent
news release. He said the release about Emulex that went out over
Internet Wire contained several red flags that likely would have been
caught at a more established service, such as the sudden reversal in
earnings, a mismatch between the headline and text and garbled
wording.

"There's a lot of evidence of very poor news management" at Internet
Wire, Lokey said. "We would have called the company and said, is this
for real?"


[For a little more backround on this: Check out Brian Martin's article
on the Subversion of Information Attacks.]

http://www.attrition.org/~jericho/works/security/subversion_of_info.html



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