A host of internet news services, including Bloomberg and Marketwatch.com, have become embroiled in an investigation by America's financial watchdog, the securities and exchange commission, after a fake news release caused a collapse in the shares of Californian networking company Emulex on Friday.

Investigators have also demanded information from Internet Wire, a public relations news service that inadvertently sent out the release, which claimed that Emulex was about to issue a profits warning and was itself under investigation by the SEC. It also said its chief executive, Paul Folino, had resigned.

The hoax was picked up by news organisations and replicated around the web, causing shares in the networking company to fall 60% - wiping £1.5bn off its market value - before trading was halted on Friday morning. Emulex issued its own statement that the release was fictitious and its shares recovered much of their fall once trading resumed after a three-hour delay.

Mr Folino described the affair as fraud and said the SEC and the Nasdaq stock exchange would be launching investigations. Weekend reports indicated that the hoaxer had used a password to get through Internet Wire's internal security and convinced the firm's night editors that the release was authorised.

Meanwhile, the Chicago Board Options Exchange said it had noticed unusual trading in options over Emulex stock late last week, indicating that speculators were betting on a sharp drop in Emulex's price. It has also opened an investigation.

In June an engineer pleaded guilty to posting a false article on an internet site that sent shares in US technology group PairGain sharply higher. Network group Lucent Technologies plunged in March after a fake profits forecast and investigators charged a man after collecting evidence from Yahoo! and America Online.