Do you recall the press release hoax in 2000 that hit Emulex Corp. (NYSE: ELX)? It was a disaster and also changed the manner in which many reporters covered news based upon corporate press releases. Now it is General Mills Inc. (NYSE: GIS) which was the victim of another press release hoax. The company is investigating the source of a fake press release that hit PRNewswire last night that had falsely stated that President Obama had ordered an investigation into woes in the company’s supply chain.
The HOAX press release is as follows:
NEW YORK, June 15 /PRNewswire-FirstCall/ — US President Barack Obama on late Tuesday evening ordered a full investigation into the General Mills supply chain in most major global markets due to a recent number of reported voluntary recalls on its food products across the world, most notably its cereal and fast food items in the US, UK, Europe and Asia. General Mills (NYSE: GIS), a leading global manufacturer and marketer of consumer foods products that include such household names as Haagen-Dazs, Cheerios and Yoplait yoghurt promised its full co-operation with Mr. Obama’s request and will be taking proactive steps towards stamping out faulty supply chain systems and ingredients from poor quality Chinese suppliers. Based on advice from the Russian and Australian Governments beforehand, General Mills became aware of supply chain issues long before the Obama administration took steps towards looking into the issue. General Mills plans on co-operating with the US Food and Drug administration in what it hopes will be a smooth and transparent review of its product quality systems across the globe.
I put a call into one of the company spokespeople who confirmed that the press release is a hoax.
The reason behind it was not known, although it is probably a simple one. There may have been a disgruntled employee, or someone thought they could make money shorting the stock. As usual, follow the money and you’ll find the source of most financial mischief.
Fake news releases can shake investors’ confidence, doubly so if they come out during market hours. Press release mechanisms are supposed to be secure to prevent shenanigans of this sort. After the Emulex hoax, reporters at many major media outlets changed how they quoted from press releases. And the hoax creator, who had bet against the stock heavily, went to prison.
General Mills shares closed at $38.17 yesterday and its 52-week trading range is $26.79 to $38.46.
JON C. OGG
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