Old Web news causes crash in UAL shares
Information can live in cyberspace forever. And that cost some investors in United Airlines parent UAL Corp. a load of money Monday.
Shares of UAL briefly plummeted as low as $3 early in the day -- from $12.30 on Friday -- after a 6-year-old story on the company’s 2002 bankruptcy filing resurfaced on the Web and was reported as news by an investment letter.
The shares bounced back after the market realized the report wasn’t current.
But investors who sold at the day’s lows are stuck: The Nasdaq Stock Market, where UAL stock is listed, said trades triggered by the erroneous report wouldn’t be rescinded.
What’s more, shares of other carriers, including Continental Airlines Inc. and AMR Corp., the parent of American Airlines, also briefly dived with UAL before rebounding.
UAL blamed the mess on a posting of a 2002 Chicago Tribune article on the South Florida Sun-Sentinel’s website.
The story then was picked up by Income Securities Advisors, a Florida investment newsletter, and disseminated as a one-line brief over Bloomberg News -- triggering a wave of panic selling.
Tribune Co., the owner of the Sun-Sentinel (and also the parent of The Times), initially pointed a finger at Google Inc., saying it appeared that the search engine highlighted the story out of the Sun-Sentinel’s archives over the weekend, which generated traffic and caused the newspaper’s computer to move the story to a page of most-viewed articles.
But Google said the only reason its search engine “crawler” bothered with the story was that it was listed on the Sun-Sentinel page of most-viewed stories -- and with the weekend date on it, instead of the 2002 date.
To the crawler, “it was a new item that said, ‘Hey, look here,’ ” Google spokesman Gabriel Stricker said.
A Tribune spokesman late Monday said the company was “still looking into” the matter.
As for how the story got to Wall Street, human error compounded computer error.
Richard Lehmann, who publishes the Income Securities Advisors newsletter, said his firm focuses in part on bonds of troubled companies. One of his reporters routinely searches the Web for news under “bankruptcy 2008,” he said. That search on Monday morning found the UAL story on a Sun-Sentinel news page with a Sept. 6, 2008, date.
The reporter, Lehmann said, thought it was fresh because of the date and because the Google search found the story on a current Sun-Sentinel page, which included an item on Hurricane Ike.
As a contributor to Bloomberg News, the newsletter generates information that goes out over Bloomberg’s news terminals worldwide.
About 11 a.m. PDT Monday, the reporter posted the information to Bloomberg. It appeared as a headline on the system that read: “United Airlines files for Ch. 11 to cut costs.”
As UAL’s stock crumbled and the company saw the headline on Bloomberg, a UAL spokesman told the news service that the report was inaccurate. Trading was quickly halted -- but not before some investors let shares go for as little as $3 apiece.
The stock ended the day at $10.92, down $1.38, or 11.2%.
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