The Securities and Exchange Commission (SEC) has launched an investigation into whether the false claims that Apple CEO Steve Jobs suffered a heart attack were meant to drive down Apple's pricey stock.

The report appeared early on Friday morning on CNN's iReport.com, a "citizen journalism" site with stories written and submitted by readers. Such sites have become increasingly popular with news outlets, as everyday people have frequently been on the scene of major events and news scenes and their camera phone pictures were the first images shown from the event.

In this case, it backfired. A story from "Johntw" said, in part, "Steve Jobs was rushed to the ER just a few hours ago after suffering a major heart attack. I have an insider who tells me that paramedics were called after Steve claimed to be suffering from severe chest pains and shortness of breath."

iReport's readers labeled it as fraudulent, and Apple was forced to quickly issue a denial. However, Apple's stock took a big hit in the process, plunging 10 percent in less than 10 minutes before recovering to close down three percent. However, it was a down day on the market so most stocks closed down.

A CNN spokesperson told the Associated Press it would provide the SEC with information on "Johntw," and that he had never posted an iReport story before.

If nothing else, it proves Jobs is prescient. At the latest iPod launch last month, he told a reporter from the cable financial news network CNBC he is healthy and that all the talk of his health was due to hedge funds that are shorting the stock. Shorting, or short selling, is the practice of selling borrowed shares and betting that the price will go down, not up.

Putting out misinformation to drive down stock for your own profit is a ticket to jail, as Mark Jakob learned in 2000 when he put out a fake press release suggesting Emulex would have to restate its earnings. The stock tanked temporarily and Jakob netted roughly $250,000 by shorting it. He also got busted, lost his gains plus $103,000 in fines and spent 44 months in prison.

CNN's iReport promotes itself as "Unedited. Unfiltered. News." The company started it in late 2006 and it gained notoriety after the Virginia Tech massacre in early 2007, when cell phone video of people was posted to the site. Since then, more than 6,400 stories have been submitted to iReport and CNN spun it off with its own domain, rather than as a subsection of CNN.com.

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The debate over user generated content

Ben Bajarin, director of consumer technologies for Creative Strategies, doesn't think CNN will face any liabilities from the SEC, but it will have to be more careful about its citizen journalism.

"CNN has to take some kind of stance on what kind of content gets approved," he told InternetNews.com. "This is the whole debate around user generated content and the consequences of it, good or bad."

When Alaska Gov. Sarah Palin's Yahoo Mail account was hacked, the contents were posted on the image sharing/loony bin Web site 4Chan, which brought the site a lot of unwanted attention, but its owner never faced any charges. Many legal pundits on cable TV said the site wasn't liable for such content.

CNN probably won't face any legal scrutiny but there is the issue of "citizen journalism" credibility, and CNN's own. "The fact someone had an outlet to make the claim [about Jobs] really begs to ask how this citizen journalism can affect the market in the future," said Bajarin.

"The debate of whether or not it was done with malicious intent should be there, but I'm more concerned about the avenue by which it was done," he added. "The point was people took it seriously, and they took it seriously because it got posted on CNN. CNN should hold itself to a journalistic standard that says if we can't back this up with facts, we're not going to display it, and that didn't happen here."