Litigation Release No. 17094 / August 8, 2001
SECURITIES AND EXCHANGE COMMISSION V. MARK S. JAKOB, EDCV-00-687 VAP (Mcx) (C.D. Cal.)
UNITED STATES V. MARK SIMEON JAKOB, CR-00-1002-DT (C.D. Cal.)
DEFENDANT IN EMULEX HOAX SENTENCED
The Securities and Exchange Commission announced that on August 6, the Honorable Dickran M. Tevrizian, Jr., United States District Judge, sentenced Mark S. Jakob ("Jakob"), the defendant in the Emulex stock hoax, to 44 months in prison for his role in disseminating a false press release that, on August 25, 2000, wreaked havoc with the stock price of Emulex, a high technology company based in Costa Mesa, California. Jakob earlier pleaded guilty to two counts of securities fraud and one count of wire fraud.
Previously, on August 31, 2000, the Commission brought an emergency enforcement action against Jakob. The Commission's complaint alleged, that on August 24, 2000, Jakob, utilizing an alias and purporting to act on Emulex's behalf, used a personal computer at El Camino Community College to send an e-mail message, instructing his former employer, Internet Wire, Inc., to issue the attached press release. The press release appeared to come from Emulex and falsely stated that the SEC was investigating Emulex, that the company's CEO had resigned, and that the company was revising and lowering its earnings for the preceding quarter. The next day, on August 25, 2000, several news organizations republished the press release. In a 16-minute period following the republication of the fake press release, 2.3 million shares of Emulex stock were traded and the price plummeted almost $61.00, from $103.94 to $43.00, resulting in Emulex losing $2.2 billion in market capitalization. Following a trading halt by Nasdaq, Emulex resumed trading later that day, after the hoax was discovered, and the price rebounded to close at $105.75. Last month, a federal judge in the SEC's civil action entered an injunction against Jakob prohibiting him from violating the antifraud provisions of the federal securities laws in the future. The court further ordered Jakob to disgorge all of his gains and losses avoided from his scheme, plus interest, in an amount of approximately $353,000 and pay a civil penalty of $102,642. Jakob consented to the court order without admitting or denying the allegations in the Commission's complaint.
Prior Litigation Releases dealing with this case: LR-16671, 16697, 16747, 16857, and 17079.