Old News, Yesterday's Sell-Off

By Frank Ahrens
Washington Post Staff Writer
Tuesday, September 9, 2008; A01



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 the vulnerability of Bloomberg's influential brand name 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 
company 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 early yesterday, when a reporter at Income 
Securities Advisors -- a Miami- based 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.

The cascade of failure may have stopped there had the article carried its 
correct publication date. Instead, it was undated.

Late last night, Tribune Co. provided a screen shot showing the six-year-old 
story appearing on Google News with a Saturday, Sept. 6, 2008, date. Tribune 
spokesman Gary Weitman said he thinks Google somehow pulled the old, undated 
story from the Sun-Sentinel online archive and assigned it a date of Sept. 
6, 2008 -- the date Google found it.

Google provided screen shots of its own last night showing the undated old 
article on the Sun-Sentinel's site on Sunday, Sept. 7, under the heading 
"most viewed business stories," which may have resulted from the increased 
traffic caused by the article's inclusion in Google News, Weitman said.

This, in turn, may have caused it to pop up when the reporter from Income 
Securities Advisors typed in "bankruptcy 2008."

In the mind of the reporter, Wall Street would want to know about a major 
airline declaring bankruptcy. The reporter posted the story to the Bloomberg 
Professional service at 10:53 a.m. yesterday.

Six minutes later, Bloomberg posted a news article headlined: "UAL Shares 
drop 33% at 10:58 a.m."

At 11:16 a.m., Bloomberg posted a correction in several languages, 
highlighted in red on the company's proprietary monitors: "UAL SAYS IT 
HASN'T FILED FOR CHAPTER 11."

"It shows the market apparently reacts to a headline as much as anything 
else," said Richard Lehmann, president of Income Securities Advisors.

Lehmann said yesterday's mistake was the first at his firm in 10 years. He 
was reluctant to heavily criticize his reporter, but said, "It would have 
been nice if the reporter had been more grounded in what's going on out 
there in the world."

"The fact that this happened with a major corporation like United based on 
one headline coming across Bloomberg, that you'd get this kind of knee-jerk 
reaction, there's something wrong with the trading mechanism," Lehmann said.

Income Securities Advisors is one of many "third-party" contributors to 
Bloomberg Professional, a subscription service used by Wall Street traders.

The Bloomberg Professional service is an Intranet limited to subscribers, 
who see news stories and financial information provided by Bloomberg 
employees, as well as content from third-party contributors, such as the 
six-year-old story mistakenly posted by Income Securities Advisors.

"The closest analogy would be a television network's content being carried 
by a cable carrier," Bloomberg spokeswoman Judith Czelusniak wrote in an 
e-mail yesterday.

Bloomberg had no further comment on yesterday's incident, she said.

Lehmann said he started getting phone calls shortly after his company posted 
the story from the Sun-Sentinel. Once he realized what had happened, he 
moved quickly -- he called Bloomberg and had the six-year-old story removed 
at 11:08 a.m. About 20 minutes later, Nasdaq halted trading.

In a statement, Nasdaq said all trades during the chaotic period from 
10:55 -- two minutes after the story was posted -- to 11:08 would stand and 
had no further comment.

United said it has demanded a retraction from the Sun-Sentinel and is 
launching an investigation.

On Sep 8, 11:10 pm, "Reality_Check©"  wrote:

  your header is correct. and the markets know it, but the fantasy of
a free market economy working is still to strong.
 the seizure of the freddi/fannie will not accomplish its goal of
stopping the slide. those actions do not reverse the crank polices of
free trade, tax cuts for wealthy parasites, privatization of our
government to the tune of no one knows for sure, but perhaps hunderd's
of billions of dollars a year, or more, and of course deregulation.
 all of those crank polices have left the american worker and
government reeling in debt and poverty. a true super power is a net
creditor nation, and a net trade surplus nation. we have been neither
for many years now.