Friday, September 12, 2008

UAL share price drop

Thanks to Craig Newmark for this interesting story.

On Monday (sept 8), UAL (United Airlines) stock dropped 75% amid a story that it had filed for bankruptcy. Turns out the story was from 2002. The original story was on the Florida Sun Sentinel's website. It was on the front page because people had clicked on the old story and made it the most popular news story. (This happens on the BBC news site a lot also).

A google search bot found the story, but as it had no date, assigned the date from the masthead of the paper. Then an analyst (who didn't read the story) uploaded it to Bloomberg. Program trading took over and the "news" triggered a massive sell off of the stock.

The SEC is investigating. The question is: Was this an innocent mistake or was their evidence of a deliberate manipulation of the stock?