Bloggers Taken for a Ride in a $4 Billion Hoax

It sounded like a juicy scoop for a Wednesday morning. Engadget, arguably the world's most widely-read technology blog, got wind of an internal memo sent to Apple employees: the iPhone would be delayed for four months, and the Leopard operating system pushed into 2008. In the breathless world of Mac fanboydom, that's news to send readers into a full-tilt tizzy.

The only problem: It wasn't true. The email was a hoax, spoofed to look like it came from Apple's servers (whether or not it did is still under investigation). 

TechCrunch notes that the subsequent panic, which was over inside half an hour, knocked $4 billion off of Apple's market cap, however briefly. At its nadir, the stock was down over $4, about 3 percent. People who sold on the way down lost money... and those who bought made a pretty penny.

Who's liable for the damage? Well, not as many people as you'd think. Engadget didn't do anything legally wrong, only something rather boneheaded in repeating what amounts to unlikely gossip without checking or even seriously considering the source. But they didn't break the law, and the slaps they're taking might be a bit much. They may very well be subpoenaed in the inevitable SEC investigation that follows to find the hoaxster (who definitely did break the law): But will they reveal the source of the leaked information?

Of course the most culpable people here are those that traded their stocks based on rumors they read on a blog. Hey, I'm a blogger and I defend my own (we all look bad when this happens), but the stories we create are not exactly the Wall Street Journal. With most blogs, you've got young enthusiasts, few with any journalism training or experience (the spelling alone ought to tip you off), getting paid a pittance for throwing together a couple of sentences about the topic of the moment. It's not journalism, it's idle chatter. Water cooler chit-chat for the wired set. (Yes, I know there are serious blogs out there, too, and I try to put more thought into my posts than the typical blog dispatch, but no one is immune to getting hoaxed this way on a juicy tip.)

So who can you trust? Well it's more of a range of values from totally trustworthy (which maybe doesn't exist) to completely untrustworthy (Weekly World News). Blogs fall all over that spectrum, but I'm positive I wouldn't trade stocks based on any of them.

Come on, people.