Bogus UA Bankruptcy Report

September 12th, 2008 | Sources: NY Times

Subjects: ,

Steve Jobs got a chuckle this week when he addressed recent speculation about his health by borrowing an old Mark Twain line. “Reports of my death are greatly exaggerated,” he said.

Perhaps United Airlines should post something similar on its web site after a series of errors led investors to believe the airline had tanked again and the subsequent sell-off wiped out $1 billion in UA’s market cap before things got sorted out.

What actually happened is a matter of dispute right now. One story is that a reporter with Income Securities Advisers was doing a routine Google search for bankruptcy filings in 2008 when he came across a link on the web site of the South Florida Sun-Sentinel. The link had a fresh date on it, but connected to a 2002 Chicago Tribune article describing UA’s bankruptcy filing in that year. The reporter included the link in a post to Bloomberg News, which in turn released a headline citing the article.

The bogus news caused UA shares to tumble 25% in less than an hour before UA officials figured out what happened. Thereafter, NASDAQ temporarily halted trading, Income Securities and Bloomberg issued corrections and the frenzy settled down quickly although UA stock closed down 12% for the day.

The Sun-Sentinel denies ever posting the story on its web site and its parent, Tribune Co. provides an equally plausible account that blames Google.


 

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