Fraudsters’ fingerprints on fake Samsung deal

Sweden’s financial authorities are investigating how fraudsters issued a forged press release on behalf of a Swedish biometrics company that claimed it had been acquired by Samsung Electronics for $650m, sending the shares soaring by 50 per cent.

Fingerprint Cards, which develops biometric technology to enhance the security of mobile devices, made the embarrassing discovery on Friday morning that an unauthorised press release had been distributed in its name and posted to its website.

The announcement was quickly denied by Fingerprint, Samsung, and Cision, the Swedish software and public relations that had distributed the release to news organisations around the world. However, Fingerprint’s shares had already surged to SKr79.25 – giving a market capitalisation of $619m. The shares were quickly suspended and all trades cancelled.

The Swedish company is not the first to be the victim of market hoaxers seeking to profit from the rapid dissemination of information on the internet. Last year investors were duped by a fake press release claiming that Google planned to buy wireless hotspot group ICOA for $400m. The fiasco reveals how vulnerable companies can be to fraudsters who target PR agencies working on their behalf.

According to Magnus Thell, managing director of Cision, the fake information was given to the company by a person purporting to represent the CEO of Fingerprints, Johan Carlström.

“We were set up for this fraud and fell into the trap,” Mr Thell said.

“All press releases are checked by senior staff who have worked with Cision for more than 10 years. We called [the person] back to check, but got the wrong impression.”

A close look at the forged press release reveals that the fraudsters used fake email addresses and a false contact number. Both the website set up at the forged domain and the telephone number are no longer in operation.

Mr Carlström placed the blame firmly on Cision for failing to verify the press release, and confirmed that there had been attempts to hack the company’s website on Friday.

“The news agency [Cision] should have done its work, they should have called us back, this was big news,” he said.

The fake press release was published on Fingerprints’ website by an automatic feed from Cision, Mr Carlström said.

“The people who did the fraud are not the sharpest knives in the box – all the trades after the press release went out have been cancelled, so no one made any money.”

Gothenburg-based Fingerprints has made four complaints of attempted share price manipulation to the market regulator since Mr Carlström became chief executive in February 2009, he added.

Nasdaq OMX in Stockholm said trading in the shares had been halted after the bourse’s automatic surveillance systems picked up large and unexpected movements in the share price.

Before Friday’s events, Fingerprint’s shares had already risen over the past year amid growing confidence that biometric security features would become increasingly common in mobile devices.