Swedish tech company caught in hoax Samsung bid

By Johannes Hellstrom and Daniel Dickson

Fri Oct 11, 2013 1:23pm EDT

STOCKHOLM (Reuters) - A fake press release claiming electronics firm Samsung (005930.KS) was buying Sweden's Fingerprint Cards (FINGb.ST) 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) 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) 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) 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) 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) 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.

(Additional reporting by Johan Sennero, Sven Nordenstam and Johan Ahlander; Writing by Simon Johnson; Editing by Erica Billingham and Niklas Pollard)

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BlackBerry co-founders considering bid for company

Mike Lazaridis, President and Co-CEO of Research In Motion, speaks during BlackBerry's DevCon at the Moscone West Center in San Francisco, California, October 18, 2011.

Credit: Reuters/Beck Diefenbach

By Alastair Sharp

TORONTO | Thu Oct 10, 2013 6:52pm EDT

TORONTO (Reuters) - BlackBerry Ltd co-founders Mike Lazaridis and Douglas Fregin are considering a bid to buy the struggling smartphone maker, according to a securities filing on Thursday, raising the prospect of an alternative to a $4.7 billion offer led by its top shareholder.

The filing did not indicate whether the pair was planning to join or to present an alternative to a tentative $9-a-share bid by a group led by Fairfax Financial Holdings Ltd. Fairfax, which is headed by financier Prem Watsa, has not yet identified other members of the group.

Lazaridis and Fregin together control some 8 percent of BlackBerry, the filing said. That compares with roughly 10 percent controlled by Fairfax.

Excluding Fregin's shares, Lazaridis controls 5.7 percent of BlackBerry, or about 60,000 shares more than he did at the end of 2012, according to Thomson Reuters data.

Lazaridis, who until early last year was one of BlackBerry's co-chief executives and co-chairmen, appears to be considering "the widest range of options possible," BGC Partners technology analyst Colin Gillis said.

"He's going to talk to people by himself; he's going to talk to Prem; he's going to talk to everybody," said Gillis.

Fairfax declined to comment on the Lazaridis filing, which noted that while Lazaridis and Fregin could make an offer, they could opt to take other steps, including selling their shares.

BlackBerry declined to comment specifically on the news, repeating an earlier statement that it is conducting a robust review of alternatives and would only say more if a deal is done or the strategic review is otherwise ended.

Investors have been skeptical the Fairfax offer will garner the financing needed, and Gillis noted that Lazaridis' interest faces the same challenge because the founders, for now, do not have any funding lined up.

Analysts believe both parties could look to secure financial backing from one or more of Canada's deep-pocketed pension funds. A foreign buyer for Blackberry faces a stringent review under the national security clause of the Investment Canada Act, as BlackBerry's secure servers handle millions of confidential corporate and government emails every day.

Industry executives, lawyers and analysts say that could limit the pool of foreign entities that may be allowed to acquire all, or at least certain parts of the company.

In sign of investor skepticism, BlackBerry's stock has traded well below Fairfax's $9 offer price since the bid was announced it last month, days after BlackBerry warned it would report slumping sales, a big loss and job cuts.

News of the Lazaridis' interest pushed shares in the company a bit higher. The stock turned positive after the news and closed on Thursday up 1.1 percent at $8.20 on the Nasdaq. But it has fallen more than 20 percent since the company warned on its earnings.

Lazaridis signed a confidentiality agreement with BlackBerry on Monday, according to the filing. If a takeover is successful, Lazaridis would become chairman, and Fregin would appoint a director, it says.

Lazaridis and Fregin, who together founded the company then known as Research In Motion Ltd in 1985, have hired Goldman Sachs and Centerview Partners LLC to assist with a strategic review of the stake.

While Lazaridis was a driving force behind the technology behind the BlackBerry, Fregin played a more minor role. He left the company as it grew into a powerhouse that produced what was then the must-have smartphone for professionals and politicians.

Fregin recently teamed up with Lazaridis again to start Quantum Valley Investments to fund quantum physics and quantum computing initiatives.

Lazaridis served as co-CEO and co-chairman with Jim Balsillie, a marketing specialist who also stepped down from those roles last year as the company's outlook turned dire.

Its travails came to a head in August when BlackBerry put itself on the block after lackluster sales for its new devices. It has struggled for years to compete with Apple Inc's wildly popular iPhone and a range of devices using Google Inc's Android operating system.

Sources close to the matter have told Reuters that BlackBerry is in talks with Cisco Systems Inc, Google and Germany's SAP AG among others, about selling them all, or parts of itself. The potential buyers have declined to comment.

(Additional reporting by Solarina Ho Allison Martell and Euan Rocha in Toronto; Editing by Jeffrey Hodgson, Frank McGurty and Lisa Shumaker)

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