Man Accused of Manipulating Stock Price Freed on Bail

A 23-year-old El Segundo student accused of sabotaging a company’s stock by issuing a phony news release was freed Friday from a federal jail on $100,000 bail.

Mark Simeon Jakob, an El Camino College student, is accused of a hoax that drove down the stock price of Orange County-based Emulex Corp. by 62%.

Authorities estimate investors lost about $50 million collectively because of the false report, which was picked up by a major financial wire service and others. Jakob faces a trial on charges of securities and wire fraud.

The Aug. 25 release stated that the chief executive of Emulex had quit and the company was restating its quarterly earnings from a profit to a loss.

Authorities say that Jakob sent the release because he faced a huge loss from short selling Emulex stock. A short sale involves selling borrowed shares of a stock that the trader does not own in anticipation that the price will decline.

When the stock fell, authorities say, Jakob bought back what he sold short, then resold it days later after the price had recovered. In all, they say, he made more than $241,000 in profits.

Jakob was released from the downtown Metropolitan Detention Center, said Thom Mrozek of the U.S. attorney’s office. He faces up to 15 years in prison if convicted.