Related Story: ? How to Create a Hoax

By the usual standards, Rick Stine should have been miffed.

In the highly competitive, warp-speed world of financial news, the managing editor of the Dow Jones News Service watched as arch-rival Bloomberg beat him to the punch on a major-league story.

Bloomberg's first shot, on August 25, went up at 10:13 a.m. Dow Jones didn't get a headline up on the story until about 10:40 a.m.

So what's the value of 27 minutes?

In this case, millions of dollars. But this isn't a story to inspire lightning-fast journalism.

The big story on August 25 happened to be about high-tech Emulex Corp., and in case you've been sequestered for the last two weeks, it was bogus. The yarn, allegedly concocted by a 23-year-old college student, claimed that Emulex was restating earnings and facing a federal investigation. Bloomberg picked up the story from Internet Wire, a Los Angeles press-release distribution company, and ran with it. The news shocked investors and caused Emulex stock to plummet in minutes.

Dow Jones' headline, delayed because editors had technical difficulty reading the Internet Wire release, didn't go out until after trading on the stock had been halted.

Stine isn't happy that his staff first ran with a bogus story, but he's clearly not miffed about Dow Jones' long delay. At least the error didn't affect stock prices.

"This is the first time I'm glad to say that Bloomberg beat me on a story," he says.

If there's anything to be gleaned from the saga of the Emulex hoax, it's that sometimes, even in these highly competitive times, it pays to slow down.

As banal as that sounds, that's just what editors have been reminding their staffs of in recent days.

Dow Jones editors generally consider a press release they receive from PR News Wire or Business Wire, the two leading distribution firms, to be as good as a statement coming straight from a company's communications office. That means they'll sometimes write routine news stories based on the releases without making a phone call to check the facts. Given the nature of most releases, that's understandable.

Interestingly, Dow Jones recently added Internet Wire to its list of trustworthy distribution sources. The Emulex story was the first one editors had pulled from the distribution service.

But Stine doesn't blame Internet Wire entirely for the blunder. Regardless of the source of the release, a staffer at Dow Jones should have made a phone call to authenticate the Emulex news, he says.

"When you get a release that talks about the entire world caving in on a company, one should check these things out," Stine says.

Bloomberg Editor in Chief Matthew Winkler agrees.

"It has rekindled an awareness that anything that is remotely surprising is worthy of some discussion before it is accepted as legitimate or fact," he says. "It's common sense."

At the Associated Press, which did not carry the story, Business Editor Darrell Christian reminded his staff of AP policy.

"On significant developments, such as a report serious enough to affect a company's stock or otherwise move the market, it is mandatory that the report be verified and the company be contacted for comment before any story is moved," he wrote in a memo. "Likewise, any release beyond the routine, received by fax or Internet, should be verified before any use is made of it."

"In the Internet age," he added, "speed is critical but not paramount."

That's got to be the bottom line.

Of course, it would be easy to blame the Internet age entirely for the Emulex debacle, to chalk the case up to wound-up journalists cutting corners.

Stine, for his part, insists that's not quite right.

"There are some people trying to turn this story into an Internet story, suggesting that those of us who are feeling the competition have let our guard down and aren't being as careful, which quite frankly is hogwash," he says. "This was the story of someone who was hell-bent on committing fraud, and was an insider who understood how [Internet Wire] operates."

David Schlesinger, editor of the Americas at Reuters, which did not carry the bogus Emulex story, agrees that the Web should not be blamed for the error, but he cites another reason.

"I'm not sure I'd point the finger at the Internet," he says. "The market itself has exploded in recent years. The number of companies doing interesting things is much greater. It used to be you could concentrate your efforts on a smaller number of companies. You knew who you were dealing with."

Today, he says, more people than ever are interested in a broader spectrum of financial news. Pressures on journalists have increased for that reason, he insists, and not simply because news moves more quickly on the Web.

So the sky isn't falling. The Web isn't destroying quality journalism.

John Pavlik, a journalism professor and executive director for the Center of New Media at Columbia University, says the Emulex story points to the need for news outlets and information distributors to use secure digital signatures to help guarantee that press releases are coming from the right source.

However, digital signatures may not have prevented the Emulex hoax, Pavlik concedes.

Stine of Dow Jones says his staff will simply be more diligent about checking questionable stories.

"If something looks unusual," he says, "we'll make a phone call."

Winkler says Bloomberg reporters and editors won't be following black-and-white rules to prevent another Emulex hoax, but they will think more critically.

"What I want journalists to do is to be critical thinkers," he says. "If you are, you're sensitive enough to recognize shades of gray, to recognize nuance, to start asking questions. That, after all, is what a good journalist is supposed to do."

If the Emulex saga isn't a good reminder of that, nothing is.