Hackers sabotage company's Web site with bogus merger notice Source: Associated Press

DETROIT (AP) -- A Michigan-based medical products company has pledged to track down whoever posted a fake news release on its Web site announcing a merger with a California biopharmaceutical firm. Stocks for both companies rose Thursday soon after the bogus news was posted on [Aastrom Biosciences Inc.]'s Web site. The posting said Ann Arbor-based Aastrom had merged with [Geron Corp.], of Menlo Park., Calif.

After discovering the prank, Aastrom notified Geron and officials with the Nasdaq index, where both companies are traded.

Both companies swiftly said no such merger talks were under way.

"We are appalled by this ruthless attempt to manipulate markets and potentially harm the shareholders of both companies," R. Douglas Armstrong, Aastrom's president and chief executive, said in a statement Thursday.

Before the bogus notice was exposed, Aastrom shares rose from $4 to $5.19 before closing up roughly 10 percent at $4.41, while Geron shares spiked from $47.19 to as high as $59.63 before closing at $51, up 8 percent.

Armstrong said the company was reassessing its Web site's security and assured "financial markets that we will work closely with the appropriate authorities to pursue those who are responsible."

The attack comes a week after hackers disabled electronic commerce heavyweights Yahoo!, [Amazon.com], eBay and other Web sites by sending more than 100 times the normal volume of e-mail traffic to them, tying up their Web sites.

Thursday's hoax was similar to one last April, when a former [PairGain Technologies Inc.] worker duped investors with a fake Internet news story that his employer was about be taken over by another company. PairGrain's stock jumped more than 30 percent on the fake news.

The culprit in that hoax, Gary Dale Hoke, pleaded guilty to two counts of securities fraud and was sentenced in August to five months of home detention and five years' probation.

Authorities said Hoke owned 1,000 shares of PairGrain stock and had options on another 5,000, but did not sell any stock during the scam.

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-- Martin Thompson (mthom1927@aol.com), February 18, 2000