Bloomberg, Internet Wire face lawsuit over Emulex hoax

Both Internet Wire, a company announcement distributionservice, and Bloomberg, a Financial information and news company, declined to comment on the suit, which was filed in the U.S. District Court for the Southern District of New York.

"We have not been served so we do not have a comment untilwe are," said Internet Wire spokeswoman Amy Orebaugh on Friday.

Bloomberg spokeswoman Chris Taylor said that as of earlyFriday morning it had not been served a lawsuit and said the company does not comment on ongoing litigation.

A false press release issued via Internet Wire and pickedup by Bloomberg, Dow Jones and some other news organisations caused the data networking equipment maker’s stock to fall more than 50 percent last Friday. Reuters did not carry the hoax.

The release said that the company was under investigationby the Securities and Exchange Commission, was about to restate its earnings and that its Chief executive had quit.

On Thursday, a 23-year-old college student was arrested andcharged with the hoax and pocketing almost $250,000 from subsequent trading of Emulex stock.

The "plaintiff seeks to recover damages on behalf of allinvestors who sold Emulex stock or call options or purchased put options on August 25, 2000 before the resumption of trading at 1:30 P.M. EST," Schatz & Nobel said in a statement.

Schatz said other investors had contacted him and heexpected that some of them would join in the suit.

Hart had about 500 Emulex shares and sold them at about $80each in the middle of the share price plunge, which reversed as soon as the hoax was revealed, said Andrew Schatz. The company’s shares, which fell to $48-1/16 last Friday before trading was suspended, have since recovered to $108-7/16.