Swedish fingerprint tech company caught in hoax Samsung bid

Swedish tech company caught in hoax Samsung bid

1:23pm EDT

By Johannes Hellstrom and Daniel Dickson

STOCKHOLM (Reuters) – A fake press release claiming electronics firm Samsung (005930.KS: Quote, Profile,Research, Stock Buzz) was buying Sweden’s Fingerprint Cards (FINGb.ST: Quote, Profile, Research, Stock Buzz) sent shares in the biometrics company soaring on Friday, prompting an investigation into suspected market manipulation. The Swedish Economic Crime Authority said it would launch a preliminary fraud probe after company news distributor Cision (CISI.ST: Quote, Profile, Research, Stock Buzz) published a statement saying Samsung Electronics Co Ltd was buying Fingerprint Cards for $650 million in cash.Both Fingerprint Cards, which develops and makes fingerprint scanners used to access computers and mobile phones, and South Korea’s Samsung said the press release was a fake and denied they had been in talks.

Shares in Fingerprint Cards rose more than 50 percent on the false statement, before the Stockholm bourse suspended trading.

Cision said its preliminary investigation showed it had been the subject of a “sophisticated fraud”.

Fingerprint Cards’ Chief Executive Johan Carlstrom criticized controls at Cision saying it should have checked that information it was sending out was correct.

“With a bigger press release, they should call to make sure,” he said. “There are only two people authorized to send press releases and that is the CEO and financial officer. In those cases they are sent from our e-mail addresses, and this one was not.”

Cision said it had followed its guidelines but was making immediate changes to some of its procedures.

Chief Executive Magnus Thell said staff had called a contact number to verify the authenticity of the release and had reached a person who had identified himself as Fingerprint’s CEO.

“When it comes to fraud, you cannot protect yourself 100 percent,” Thell said.

The contact information in the fake press release included the e-mail address “investrel@fingerprint-cards.se“. That domain name, fingerprint-cards.se, was created on Thursday, a search of records on the website of .SE, Sweden’s Internet Infrastructure Foundation, showed.

The .SE organization is responsible for Sweden’s top-level domain “.se”, including the registration of domain names. A phone number in the release was not available when called by Reuters.

SECURITY

Fingerprint recognition is a hot area after Apple (AAPL.O: Quote, Profile, Research, Stock Buzz) introduced the technology in its latest iPhone saying it would protect devices from criminals and snoopers seeking access.

Shares in Fingerprint Cards have risen almost sixfold since the start of the year.

The Nasdaq OMX (NDAQ.O: Quote, Profile, Research, Stock Buzz) Stockholm exchange cancelled trades worth 160 million Swedish crowns ($24.6 million) in Fingerprint Cards from 10.17 am (0817 GMT) on Friday, just before the false statement was released, until it halted trading 17 minutes later.

The exchange also cancelled 140 million crowns of trades in Fingerprint’s rival Precise Biometrics (PREC.ST:Quote, Profile, Research, Stock Buzz) which rose as much as 44 percent when the press release was published.

“Of course we are going to investigate what has happened and we are going to do that with the company in question, the FSA (market regulator) and Cision,” Carl Norell, a spokesman for the exchange said.

Trading in both stocks resumed later on Friday. Fingerprint ended the day unchanged at 52.75 crowns, while Precise Biometrics was also unchanged at 2.09 crowns. Cision shares closed 5.3 percent lower.

Reuters withdrew a story it had published based on the hoax press release.

While market manipulation is rare in Sweden, it is not unheard of internationally.

Late last year, a fake press release said internet giant Google was buying wireless hotspot provider ICOA Inc (ICOA.PK: Quote, Profile, Research, Stock Buzz) for $400 million.

Shares of ICOA, which is traded over-the-counter, jumped from .0001 cents to .0005 cents before the company’s CEO denied the news.

It remained unclear who was behind publication of the Fingerprint Cards press release.

Gunther Marder, an economist at internet bank Nordnet said the perpetrators probably had positions in biometric firms listed on other markets in Europe not in Fingerprint or Precise.

“You would look around the world outside the territory that the Stockholm exchange supervises,” he said, adding that sophisticated criminals would know trading in stocks listed in Stockholm would be cancelled.

 

Cision Investigating ‘Incorrect’ Release About Samsung Purchase

Oct. 11 (Bloomberg) — Cision AB, a Swedish distributor of press releases, is investigating why it published an “incorrect” statement that said Samsung Electronics Co. (005930) had agreed to buy Swedish technology company Fingerprint Cards (FINGB) AB.

“We are right now investigating what happened,” Helen Rigamonti, director of customer operations at Stockholm-based Cision, said in a phone interview. “We are looking into our procedures, but we followed all of our security procedures and we can’t exactly tell you what happened as of now.”

A contact person at Fingerprint Cards had sent the release to Cision, Rigamonti said. Fingerprint Cards said it didn’t send the release and it would report the incident to the police and the Swedish Financial Supervisory Authority, according to a statement.

Shares of Fingerprint Cards, a maker of biometric security solutions, jumped as much as 51 percent in Stockholm and Swedish peer Precise Biometrics AB (PREC) also soared after the press release said Samsung had agreed to a $650 million takeover.

“The press release was incorrect. Cision apologizes to Fingerprint Cards AB and other stakeholders for this error,” Cision said in a statement. Calls to Fingerprint Cards for further comment weren’t immediately returned.

Jason Kim, a spokesman for Samsung, said he was unaware of any such deal and that he would confer with colleagues. Chenny Kim, a spokeswoman at Samsung, later sent a text message saying “it’s not true.”

Shares of Gothenburg, Sweden-based Fingerprint Cards were halted after the jump. Precise Biometrics pared gains, advancing 3.8 percent to 2.17 kronor at 11:39 a.m. in Stockholm. Cision declined 3.5 percent to 36 kronor.

Fingerprint Cards and Precise Biometrics have soared this year amid predictions that more smartphones will be equipped with fingerprint-reading technology after Apple Inc. (AAPL) added such sensors to its latest iPhone model.

To contact the reporter on this story: Adam Ewing in Stockholm at aewing5@bloomberg.net