Judge Again Dismisses Suit Over Emulex Hoax

For the second time, a federal judge dismissed a lawsuit against Bloomberg LP and Internet Wire Inc., saying they were not to blame for a hoax that caused the stock of Emulex Corp. to plummet by $60 a share in 16 minutes in August 2000.

The complaint, filed by Emulex shareholder Ronald Hart, claimed Bloomberg “falsely reported” details of a phony press release that said Emulex was restating earnings, that its chief executive was stepping down, and that the Securities and Exchange Commission was about to launch an investigation of the accounting practices of the Costa Mesa computer circuit board maker.

The author of the release, ex-Internet Wire employee Mark Jakob, has pleaded guilty to criminal charges in the matter.

U.S. District Judge Milton Pollack dismissed the case in June but gave Hart a chance to file a new suit.

He rejected the complaint again Wednesday, saying Hart failed to show that Bloomberg or Internet Wire had sought to defraud investors.

Pollack said Hart had added little to the previous complaint.

Hart, who had sought class-action status for his suit, claimed that Bloomberg should be held liable because it failed to verify that the release actually came from Emulex before publishing headlines on its news wire.

The release was sent to Internet Wire by Jakob, who was facing a margin call from his broker after he sold Emulex shares short. He had hoped to drive down the price.

Emulex shares closed Wednesday at $11.78, up $2.52, on Nasdaq.