Call it one Freaky Friday in Sweden. A press release went out announcing that Gothenburg-based Fingerprint Cards, a biometric technology company, and Samsung Electronics had entered into a definitive agreement for Samsung to acquire Fingerprint Cards for $650 million in cash. No way. Johan Carlström, CEO of Fingerprint Cards, subsequently said it was not true and that the release was fake. Samsung said the release was fake too.
Then where did the release come from? The press release distributors say they were hit by a sophisticated fraud. So whodunit? Nobody knows, and that is why the biometric sensor company is calling for a police probe. Likewise, Cision, the press release distributors, said they were turning the case over to the police "for investigation of criminal offense."
Fingerprint Cards is actually reporting the Friday incident both to the police and to the Swedish Financial Supervisory Authority. In its Friday statement after the phony release made its way around the Internet, the company issued a formal statement on its site:
"The news in today's media that Fingerprint Cards AB has been acquired by Samsung is incorrect. The previous press release was not sent by Fingerprint Cards AB. Trading in the share has been suspended. What has happened will be reported to the police and to the Swedish Financial Supervisory Authority."
Distributor Sends Apologies
Stock activity tells a story about why calling in financial watchdogs would be in order. The fake news that Samsung would buy the biometrics firm sent Fingerprint Cards shares up 51 percent before the word was sent out from Sweden and Seoul that the story was untrue. The volatility was subsequently reined in and suspended by the Stockholm exchange.
Cision said in its "preliminary investigation" of the event, the company had followed procedures but had been subject to a fraud. Cision said it "apologizes to Fingerprint Cards AB and other stake holders for this error."
As for Samsung, the message was that no such deal had taken place; the release was simply not true.
While nobody knows who generated the fake announcement, the event triggered media and business awareness of two contemporary headaches: (1) Internet-generated rumors about technology companies in hot business areas can easily spread like wildfire; and (2) stock market trading can reflect false rumor-mongering with unsettling volatility.
Fingerprint Cards produces biometric components and technologies for matching an individual's unique fingerprint to verify identity. The technology consists of biometric sensors, processors, algorithms and modules that can be used separately or in combination with each other. Now that Apple has added a fingerprint reader to its latest iPhone, market watchers are looking to see what other vendors of smartphones will do in adding fingerprint-reading technologies. In turn, any story about a consumer electronics giant looking to buy a fingerprint technology business that could add components for phones and computers would be plausible.
Some industry watchers raised the possibility that this may have been an instance of market manipulation, not by any of the parties involved but by sophisticated mischief makers on the outside.
This would not be a first in market manipulation mayhem. Last year, a fake press release said Google purchased ICOA, a Wi-Fi provider, for $400 million. Stocks quickly reacted, and ICOA shares jumped, before the company's CEO and Google said the story was not true.
A troubling wakeup call for media watchers was the way established outlets and sites grabbed on to the news emanating from the press release, only to learn that the release was fake.