(August 31 – 16:00 ET) – The FBI has charged Mark Simeon Jacob, a 23 year old student, in connection with the Emulex Corp. press release scandal.

Internet Wire released a phony press release on August 25 that sent Emulex down 57% and cut US$2 billion from its market capital. The release stated the firm was having accounting trouble, and that its CEO had resigned. Jacob was a former employee at Internet Wire.

FBI agents made the arrest this morning in El Segundo, Ca., charging Jacob with securities and mail fraud. U.S. Attorney Alejandro Mayorkas said he faces a maximum 15 years in jail.

The FBI alleges that Jacob made about US$236,000 in trading profit from the scheme. He allegedly shorted 3,000 shares and bought another 3,500 shares when the company bottomed out.

Mayorkas said the FBI traced e-mails from Internet Wire to El Camino Community College where Jacob was a student. It then scrutinized his trading records, which helped nail the case for the Feds.

Mayorkas issued a warning to other prospective Internet fraudsters. “Do not count on the Internet to serve as a shield,” he said. We can navigate the information superhighway just as we patrol the streets.”

Valerie Caproni of the SEC called the case, “One of most devastating financial hoaxes in the Internet age”. Caproni said the SEC’s investigation is ongoing to ensure no one else was involved.
-IE Staff