SEC Gets Involved In Fake Steve Jobs Heart Attack Story

The U.S. Securities and Exchange Commission (SEC) is investigating a fake story that appeared on CNN’s iReport site last week which claimed that Apple CEO Steve Jobs had suffered a heart attack.

The SEC's enforcement unit is trying to determine whether or not the iReport.com posting was intended to push down the company’s stock price. CNN is cooperating with the SEC’s probe, network spokeswoman Jennifer Martin said. The report is “not true,” Apple spokesman Steve Dowling said in an interview.

Apple shares fell as much as 5.4 percent immediately following the rumors of Jobs's heart attack. Leading the SEC to believe there might have been some price manipulation going on. This isn't the first time rumors over Jobs's health affected the price of shares this year. Rumors and speculation over Jobs's health and a possibility of cancer contributed to a 51 percent drop.

The news story was originally posted onto CNN’s iReport by someone under the nickname of johntw. The story has since been removed. iReport is described by CNN as "Unedited. Unfiltered. News" and the parent company makes "no guarantee about the content or coverage" on the site. Content is "entirely user-generated," said CNN spokeswoman Jennifer Martin.

This was the text posted:

Steve Jobs was rushed to the ER just a few hours ago after suffering a major heart attack. I have an insider who tells me that paramedics were called after Steve claimed to be suffering from severe chest pains and shortness of breath. My source has opted to remain anonymous, but he is quite reliable. I haven’t seen anything about this anywhere else yet, and as of right now, I have no further information, so I thought this would be a good place to start. If anyone else has more information, please share it.

According to CNet News what hasn't been widely reported yet is that iReport was not the first place those behind the false report tried to spread it. Arnold Kim, who operates the blog, MacRumors.com, reported late Friday that someone submitted the same rumor to his site using an anonymous IP address. In his case, Kim did the thing any good journalist would do and did some research on the report and decided the rumor was a fake. Later, he tracked the report and found that it was being circulated by members of online message board, 4chan. Kim also found the rumor circulating on Digg, but he said Digg users voted the story down, meaning they also were skeptical.

The stock swing caused by today's erroneous report drew renewed calls for Apple, which has said only that Jobs's health is a "private matter," to be more forthcoming, said Jeffrey Sonnenfeld, senior associate dean at Yale University's School of Management.

"Leaving it to rumor and speculation is reckless," said Sonnenfeld, who has personally owned Apple shares since 1997, the year Jobs returned as CEO. "If he is healthy, they should say so. If he's not, we should know that too."

So who is to blame for the story going mainstream? And why didn't mainstream news services discredit the report before any damage was done?

Silicon Alley Insider has a big blame in the story catching credibility. SAI published this headline: "Apple's Steve Jobs Rushed To ER After Heart Attack, Says CNN Citizen Journalist." SAI was sure to shield itself by saying "the report hadn't been substantiated but reporters were checking it out."

According to Henry Blodget, SAI's founder and a former well-known tech analyst to that point, no other mainstream media outlets had published anything about Jobs' health. Blodget said SAI tried to contact Apple and CNN representatives to confirm the story prior to publishing but were unable to reach them. SAI decided to post the item--with all the disclosures about it being unconfirmed--anyway.

Blodget stands behind his decision to run the unconfirmed rumor saying "By the time we found it, the story had more than 100 Diggs and 50 comments and was all over Twitter. We didn't know whether the story was true, and we had no immediate way to confirm or debunk it. We viewed it as significant, however, both for those who care about Apple and Steve and as a first meaningful test of "citizen journalism."

Blodget himself says his desicion to run the story was based purely on the reactions he saw on Digg and Twitter. To call this poor journalism is an understatment. Obviously there was no evaluation of the information since the information rellied upon a single post from an annoymous uuser at iReport.com, which is hardly a reputable source. In iReport's "About" section is written this statement: "CNN makes no guarantees about the content or the coverage on iReport.com."