After Papa John’s International Inc. (NASDAQ:PZZA) became a centerpiece of fake news on Monday, the suspected incident of a “pump-and-dump” scheme is the latest in a long history of market manipulation plots that use fake news to deceive investors and algorithms. Here are three other notable cases where fake reports rocked publicly traded companies.
Check out PZZA stock price here.
Vinci SA
In November 2016, French construction giant Vinci SA (OTC:VCISY) saw its stock collapse by over 18% within minutes.
The catalyst was a fake press release, formatted to look identical to the company’s official communications, which was sent to journalists and picked up by multiple major news agencies, as per a BBC report.
The fraudulent release claimed Vinci had fired its CFO and would be restating its accounts after discovering 3.5 billion euros in hidden losses. The company issued a formal denial, and the stock recovered, but not before the hoax temporarily erased billions in market value.
Avon Products
A brazen hoax targeted Avon Products in May 2015, which is privately held now, causing its stock to spike by 20%.
According to CNBC, the scheme involved a fraudulent filing made directly to the Securities and Exchange Commission’s (SEC) public database, EDGAR. A non-existent firm calling itself “PTG Capital” filed to buy Avon for $18.75 a share, nearly triple its trading price.
The stock’s surge triggered multiple trading halts before Avon confirmed the offer was “bogus.” The incident exposed a critical vulnerability in the SEC’s filing system, which at the time did not verify the identity of those submitting filings.
See Also: Papa John's Stock Falls After Apollo Pulls Bid To Take Company Private
Galena Biopharma
A more elaborate “pump-and-dump” scheme was detailed in a 2017 SEC complaint against multiple individuals and firms, including Galena Biopharma, which is now known as Sellas Life Sciences Group Inc. (NASDAQ:SLS) after a reverse merger.
Instead of one fake press release, this operation involved paying writers to publish hundreds of bullish, undisclosed articles across reputable financial websites under various pseudonyms, as per a LA Times report.
These seemingly independent analyses, which were in fact paid promotions, helped drive Galena’s stock price up by over 900%. The scheme was designed to dupe both human investors and the trading algorithms that scrape news sites for market sentiment.
What Happened With Papa John’s?
A false report of a $65-per-share acquisition offer from TriArtisan Capital Advisors circulated online.
The report, which spread through sites mimicking legitimate news outlets, was quickly debunked by sources close to the company, but not before the stock experienced extreme volatility.
After rising 18% intraday, the stock finally settled 7.04% higher at $43.97 apiece. It fell 0.38% after-hours. The stock has advanced 1.59% year-to-date and it has fallen 17.63% over the year.
PZZA maintained a weaker price trend over the short, medium, and long terms, with a poor growth ranking. Additional performance details, as per Benzinga’s Edge Stock Rankings, are available here.
The futures of the S&P 500, Nasdaq 100, and Dow Jones indices were mixed on Tuesday after settling higher on Monday.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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