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United Airlines Blindsided By Online Time Warp

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McClatchy-Tribune

The Tampa Tribune

Published: September 11, 2008

MIAMI - United Airlines and its stockholders experienced the potential dangers inherent in a high-tech society Monday when outdated information about a 2002 bankruptcy filing zoomed around the Internet and prompted a run on the company's stock.

For a short time Monday, United stock fell 75 percent before mostly rebounding. The company said the sell-off began after a 6-year-old Chicago Tribune article about UAL's bankruptcy filing was found on the Broward County-based South Florida Sun-Sentinel Web site with the date changed to Monday and then republished by others.

It's unknown how much money may have been lost or made because of the article. The airline said it has demanded a retraction from the Sun-Sentinel.

"This is a serious event that resulted in the halting of the trading of our stock today," United spokeswoman Jean Medina said Monday. "It is what happens when people are irresponsible and don't check facts, and our lawyers are investigating."

In a statement Monday, Chicago-based Tribune Co., the Sun-Sentinel's parent, said the article was picked up by an investment advisory and research firm and republished as if it were current.

"The story was located in the archive section of the Web site of the Sun-Sentinel in South Florida," the statement 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."

Richard Lehmann, president of Income Securities Advisors, a Miami Lakes-based publisher of financial information, said his company posted the article to the Bloomberg financial news service after finding it on the Sun-Sentinel site.

Lehmann said a reporter, looking for distressed company news to post on Bloomberg, did a Google search Monday morning under the term "bankruptcy 2008," and the United bankruptcy story came up as the top story, dated Monday with a link to the Sun-Sentinel.

"Our reporter took it for what it said, put a story together, put a link to the Sun-Sentinel and submitted it and put it on Bloomberg," Lehmann said. That story went online at 10:55 a.m., he said.

"The minute the story came up, the phone started ringing around here, and that's when I became aware of it, and I knew something wasn't right," Lehmann said. "I checked all the stories under Bloomberg, and we were the only ones reporting this and we don't originate news stories, so something had to be wrong, and I asked Bloomberg to pull it."

At 10:56 p.m. the stock was trading at $11.51, then plunged to $3. Shares resumed trading at 11:01 a.m. and recovered most of the loss by 12:29 p.m., when the stock was at $11.30, according to Bloomberg.

Bloomberg yanked the story at 11:08 a.m., but the stock had already plummeted.

"It seems to be the effect of computerized trading - when a price moves, a lot of sell orders get triggered automatically," Lehmann said. "It's one of the vulnerabilities of our system. Unfortunately it lends itself to someone doing this on purpose, which is probably going to get looked into."

United exited bankruptcy in February 2006.

United stock had closed at $12.30 on Friday, and opened Monday at $12.17. Then it fell as low as $3 Monday morning before trading was halted. Trading resumed after United issued a statement saying the bankruptcy was untrue. The stock closed at $10.92 Monday, down 11 percent.

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