Internet-fueled panic rocks United Airlines stock
The incident shows how fast bad information— and confusion—can spread unchecked on the Web
By David Greising | Chicago Tribune correspondent September 9, 2008
chicagotribune.com
A nearly 6-year-old article circulating on the Internet as breaking news about United Airlines caused a brief 75 percent drop in the airline's stock Monday, highlighting a potential peril about how information travels in the modern world.
The steep sell-off in United's shares came after a news service in Florida distributed an old story posted on the South Florida Sun Sentinel Web site six years ago. The story was distributed by Miami Lakes, Fla.-based Income Securities Advisors to a market information site operated by Bloomberg LP. Monday's recirculated story gave the appearance that United had filed for bankruptcy protection again.
In fact, the story was originally published Dec. 10, 2002, by the Chicago Tribune, marking the airline's decision at that time to seek protection from creditors. Both the Chicago Tribune and Sun Sentinel are owned by Tribune Co.
For a brief time Monday investors panicked over the notion that Chicago-based United had again filed for Chapter 11 bankruptcy. Moments after a headline for the story hit Bloomberg, one of the most closely watched financial news services, shares in United stock fell from about $12 a share to a low of $3, prompting a halt in trading of United stock.
Trading resumed more than an hour later, after United issued a statement repudiating the report as "completely untrue." United "continues to execute its previously announced business plan to successfully navigate through an environment marked by volatile fuel prices and continues to have strong liquidity," the statement said. The company said it is launching an investigation.
The events unfolding at light speed showed how quickly information—and confusion—can spread on the Internet. And to some experts, the episode highlights the dangers posed by a lack of standards and attention to detail in the Internet age.
"This is a big warning call about the importance of quality control in the digital era," said Robert Steele, a media ethicist at DePauw University.
Just in recent days, the presidential campaign of Barack Obama had to debunk a spurious column falsely linked to New York Times columnist Maureen Dowd that raised questions about the source of Obama's campaign finances. And the morning after Republican presidential candidate John McCain identified Alaska Gov. Sarah Palin as his vice presidential pick, a doctored photo falsely depicting a gun-toting Palin spread quickly on the Web.
The United episode is the latest in a growing catalog of Internet misinformation. It involved the largest search engine, Google, some of the biggest names in news—Bloomberg and Tribune Co.—and one of the best-known U.S. brands, United Airlines.
The events that briefly torpedoed the airline's stock started Saturday night. But Tribune Co. and Google disagree on the exact chain of events.
Google spokesman Gabriel Stricker said sudden activity on the Sun Sentinel Web site attracted the attention of a Google program to catalog information on the Web.
However, Tribune Co. spokesman Gary Weitman, said a company investigation of activity on the Sun Sentinel Web site found there was no activity on the story until approximately the same time the Google program, called a "bot," visited the Sun Sentinel site around 10:30 p.m. Pacific time and found the story, which was undated in the archive.
Both agree the Google program put a Sept. 6, 2008, time stamp on the 2002 article in Google News. But Tribune Co. said that only after the story was placed on Google News did it attract enough page views to become one of the most popular stories on the newspaper's Web site by Sunday.
When a researcher for Income Securities searched Monday morning for "bankruptcy 2008" on Google News, the story about United Airlines' bankruptcy prominently popped up, said Income Securities' president, Richard Lehmann.
The researcher linked to the Sun Sentinel Web site, found a copy of the story, and forwarded it to Bloomberg at 9:53 a.m. Chicago time, Lehmann said. Moments later a headline declaring "UAL Corp.: United Airlines files for Ch. 11 to cut costs" appeared on Bloomberg news screens around the world.
In a space of minutes, United's stock dropped from around $12 a share to $3 a share, prompting the Nasdaq system to halt trading at 10:07. Nearly an hour passed before United issued a statement debunking the report, and trading resumed at 11:29. United's shares closed at $10.92, down 11 percent.
The Income Securities researcher did no independent verification because "we are a reading service," Lehmann said. "We say, 'This story appeared today in the Sun Sentinel.' I don't think that calls for us to check it out."
The story appeared fresh to the researcher because other items on the page included Monday's date as well as information about an approaching hurricane, Lehmann said.
A Sun Sentinel spokesman said the story did not appear in Monday's newspaper, and even though it was listed as "most popular" on the newspaper's Web site, it existed only in the archives. No one at Tribune Co. had gone into the original story file since it was published, nor had any of its newspapers republished the story over the weekend or Monday, the company said.
"The story contains information that would clearly lead a reader to the conclusion that it was related to events in 2002. In addition, the comments posted along with the story are dated 2002," the company said in a statement. Tribune's Weitman said the company's investigation is not yet complete.
A Bloomberg spokeswoman, Judith Czelusniak, acknowledged that information delivered to the company's professional news service from suppliers such as Income Securities can go out to subscribers to Bloomberg's professional service without independent verification.
The incident immediately raised questions about whether someone might have tried to manipulate United's stock. But Joe Hargett, researcher at independent research firm Schaeffer's Investment Research, said a review of options trading did not support such a theory.
There was no spike in options volume and no significant change in price in the days or hours prior to the collapse in United's stock price, Hargett noted.
The Securities and Exchange Commission and Nasdaq declined to comment on whether either entity is investigating the matter. |
