Case Study:

Kroger

Market manipulation

In November 2021, a press release shook the financial markets, claiming that Kroger, one of the largest retail chains in the U.S., would begin accepting Bitcoin Cash (BCH). The fake announcement was briefly hosted on Kroger’s investor relations page and distributed via newswire, creating immediate buzz in the cryptocurrency space.

As a result, BCH prices saw a temporary spike before the truth emerged: the press release wasn’t legitimate.

Kroger quickly clarified that the release was fraudulent, urging the public to disregard it, while the newswire service issued a similar notice, advising readers to ignore the false information. Although the incident only caused a minor dip in Kroger’s stock price, it highlighted a larger issue: how easily bad actors can influence financial markets.

Michael Fox
Chief Client Officer, ICR

To understand how companies should respond to a similar incident, we spoke with Michael Fox, Chief Client Officer at strategic communications firm ICR, who shared key thoughts regarding investor communications.

“While volatility serves the interests of some investors, the markets overall thrive on stability and consistency. Fake news – especially if it is manufactured with a motive to impact a specific stock or sector – undermines that objective and injects a level of uncertainty and confusion that is not helpful to the vast majority of market participants,” Fox said.

Adam Christensen
Chief Marketing Officer, Notified

He added: “It’s accepted that companies will make mistakes and negative events will occur, but companies can build trust by promptly, thoroughly and effectively responding to them [like Kroger did]. If they fail to, the implications can be long standing and investors in particular have long memories, and lots of other options for placing their investments. However, when a company is victimized by an attack, unless it is guilty of significant negligence in allowing that attack to occur, stakeholders will not likely hold it responsible for long.”

The Kroger example brings to light the critical role of investor relations websites, where precise and trustworthy information is vital to maintaining stakeholder confidence.

Adam Christensen, Chief Marketing Officer at Notified, shared his insights on how to protect against misinformation when it comes to IR service providers.

“IR websites serve as the primary sources of truth for the financial community,” Christensen emphasized. “It’s the place you should always link back to, so investors are able to validate important information. It reinforces your IR site as the trusted destination.”

He also noted the potential improvements Kroger could make in the future.

“While I don’t know their unique situation, the company could look to potentially consolidate vendors and use one partner for their website, press releases and webcasts,” he said. “There’s a greater potential for error when working with multiple IR providers, especially when it comes to market-moving news. You should try and remove as much risk as possible by working with a single team of specialized staff that prioritizes information accuracy and security.”