United’s shares plunge 76% on bogus bankruptcy report
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The perils of the Internet, where no bit of information ever really dies: Shares of United Airlines parent UAL Corp. briefly plummeted as low as $3 early today -- from $12.30 on Friday -- after a 6-year-old story on the company’s 2002 bankruptcy filing apparently reappeared on the website of the South Florida Sun-Sentinel.
The shares recovered after United issued a statement saying the story was ancient.
From the company: ‘United Airlines today said reports that the company filed for bankruptcy are completely untrue and were caused by the irresponsible posting of a 6-year-old Chicago Tribune article by the Florida Sun-Sentinel newspaper website with the date changed. The story was related to United’s 2002 bankruptcy filing, and United has demanded a retraction from the Sun-Sentinel and is launching an investigation. United exited bankruptcy in February 2006.’
After trading sharply lower for about 13 minutes, United’s shares were halted for about 90 minutes. They recovered nearly all of the early losses when trading resumed, before pulling back with a decline in airline stocks in general. At about noon, the stock was off $1.36, or 11.1%, to $10.94.
The Sun-Sentinel is owned by Tribune Co., also the parent of the Los Angeles Times. In a statement, Tribune acknowledged that the story ‘is not current’ and said it was looking into the situation.
The erroneous story was picked up by Income Securities Advisors, a South Florida investment newsletter, and wound up as a headline on Bloomberg that said ‘United Airlines files for Ch. 11 to cut costs.’
The headline was corrected four minutes later. But the damage was done.
What about the investors who sold on the ‘news’? The Nasdaq Stock Market, where United trades, says they’re out of luck.
‘NASDAQ has reviewed the transactions ... executed between 10:55:00 and 11:08:00 EDT today and has determined that all trades will stand,’ the market said in a statement. ‘This decision cannot be appealed.’