2002's News, Yesterday's Sell-Off
Tuesday, September 9, 2008
A six-year-old article mistakenly seen by Bloomberg financial news users yesterday reported the bankruptcy of United Airlines and triggered a massive sell-off that nearly obliterated the company's stock in a matter of minutes.
The light-speed wipeout is a powerful reminder of how quickly bad information can spread via the Internet to a trigger-happy Wall Street that is willing to dump millions in stock before checking the facts.
It exposed how Bloomberg's influential brand name is vulnerable to bogus content -- the old article was posted to a Bloomberg subscription service by a Florida investment adviser, one of Bloomberg's many "third-party content-providers." Moments later, it popped up under United Airlines company news as a headline only: "United Airlines files for Ch. 11 to cut costs."
And it showed how the imperfect technologies of Internet search combined with human failure can cause ruinous results.
United parent company UAL opened trading on the Nasdaq Stock Market yesterday at $12.17 per share. The 2002 bankruptcy article appeared on Bloomberg monitors on Wall Street just before 11 a.m. In the minutes that followed, some 15 million shares of UAL traded and the stock plunged to $3 per share. Trading was halted at 11:30 a.m. for an hour. The stock closed down $1.38 at $10.92 yesterday.
United said it is unsure whether the incident will cause the already-shaky airline material damage.
At United's Chicago headquarters yesterday morning, the airline's financial services division watched in horror as the stock plummeted, while its shocked media relations department was besieged by reporters asking why the firm had declared a surprise bankruptcy, only six years after its last one.
UAL filed for bankruptcy protection in 2002 and emerged in 2006.
The bizarre chain of events began yesterday, when a reporter at Income Securities Advisors -- a Miami area investment service that disseminates news about distressed companies -- typed in a Google search: "bankruptcy 2008."
Up popped the six-year-old article from the South Florida Sun-Sentinel, which originally appeared in the Chicago Tribune on Dec. 10, 2002, the day after United declared bankruptcy. Tribune Co. owns the Tribune and the Sun-Sentinel.
Why did Google find a six-year-old article?
Largely because it was undated in the Sun-Sentinel Web archive. The Google Web crawler assigned the article the date it was found -- Sept. 6, 2008. The reporter from Income Securities Advisors saw the Saturday date and assumed it was a new article.