Press release service Business Wire said on Monday it will no longer accept releases by email after it inadvertently distributed a hoax statement involving a small pharmaceutical company, days after its main rival was burned in a similar fashion.
Business Wire, a distributor of company statements and a unit of Warren Buffett's Berkshire Hathaway Inc, also said a criminal investigation had been launched into the hoax involving Javelin Pharmaceuticals Inc.
Javelin said the information in the hoax release was false and was sent to Business Wire from an unknown third party.
Business Wire said all press releases must now be submitted through its order-entry system, which it said has been in use since 1998 without incident.
Previously, Business Wire on rare occasions accepted emails as an accommodation to clients, said CEO Cathy Baron Tamraz.
Javelin said it contacted Business Wire immediately after the hoax statement appeared at 11:19 p.m. EDT on Friday. Business Wire withdrew it about eight hours later.
The hoax statement said the U.S. Supreme Court had issued a positive ruling regarding the production and marketing of Javelin's pain management products.
Javelin applauded the result as a 'huge success for Big Pharma,' the hoax statement said. This will make waves in the Pharmaceuticals Industry for there are similar cases in the pipeline for other large companies (in) other Federal Courts. The impact of this ruling will be felt for years to come.
Tiny Javelin only has had $11 million of revenues in its entire 12-year history, according to a regulatory filing.
Javelin is currently the target of a takeover bid by Hospira Inc, a specialty drug company. Hospira's tender offer was extended on Thursday and expires on June 30.
Hospira did not immediately return a call for comment.
PR Newswire, a unit of Britain's United Business Media Ltd and Business Wire's main U.S. competitor, issued a hoax statement last week that said U.S. President Barack Obama had ordered an investigation into the supply chain of General Mills Inc following voluntary recalls of its cereals and fast foods.
The company said the statement was entirely false.
PR Newswire did not immediately return a call for comment on Monday.
While the Javelin and the General Mills hoaxes landed outside trading sessions, several have sent share prices crashing.
In 2000, Emulex Corp shares plunged 59 percent in 16 minutes after a fake release said it was lowering reported results, its chief executive was stepping down, and the U.S. Securities and Exchange Commission was probing the company. The sender later received a 44-month prison sentence.
In 2004, on the 20th anniversary of the Bhopal, India chemical disaster, the BBC broadcast an interview with an impersonator claiming to be a Dow Chemical spokesman who said the company was planning to spend $12 billion to compensate victims.
Shares of Javelin closed 1 cent lower, or 0.7 percent, at $1.41 on the American Stock Exchange.