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I'm surprised this hasn't happened before now.
This isn't a story about security (although it is about securities), but it's so remarkable I thought I'd include it here anyway.
A worker at a Miami investment advisory firm called Income Securities Advisors, which publishes news alerts that get distributed through the Bloomberg News Service, did a Google search on bankruptcies this morning and got back search results that included a six-year-old story published in the South Florida Sun Sentinel about the 2002 bankruptcy filing by United Airlines.
The employee mistook the news for a current story -- despite the date clearly marked on it (see update below) and other information in the article "that would clearly lead a reader to the conclusion that it was related to events in 2002" -- and included it in a subscription newsletter that was distributed through Bloomberg.
Panic ensued, as they say, and United Airlines stock price plummeted 75 percent (down from $12.30 to $3 a share) before someone realized it was an old news story and things righted themselves. The stock rebounded to $10.92 a share by Monday's closing. But not before United Airlines contacted the Sun Sentinel and demanded the newspaper retract its (6-year-old) story.
UPDATE 1: The head of Income Securities Advisors is now saying that the article had a current date on it. Or maybe the article had no date on it. His account to various news outlets is inconsistent.
Either way, what seems to be clear is that the archived article appeared within a frame of current headlines -- which is how many web sites display archived material, to draw readers to current stories. What could have happened, was that the person who read it didn't see a date on it but saw current headlines around it and jumped to the conclusion that the United Airlines piece was current.
UPDATE 2: The story gets more convoluted and more interesting. According to a follow-up investigation, the article in the Sun Sentinel's archive had no date on it. But when Google's spider grabbed it, it assigned a current date to the piece, which then resulted in the article being placed in the top results of Google News. When the employee from Income Securities Advisors ran a Google search on "2008 bankruptcies," the old United Airlines story appeared as the top link in the results, with a September 6, 2008 date on it. (Google has now released a screenshot that shows the UAL story as it appeared on the Sun Sentinel web site. The only date in the screenshot is September 7, 2008, the date Google accessed the page. There is no date under the story's headline to indicate when it was published.)
At 11 am Monday, the employee added the story to a feed that is included in a Bloomberg subscription service and within minutes, 15 million shares of United Airlines stock had been sold before trading on the stock was halted.
As I wrote at the top of this post, it's surprising something like this hasn't happened before.
But, unfortunately, it looks like the wrong lessons are being learned from this. Richard Lehmann, president of Income Securities Advisors, told the Washington Post that the incident "shows (that) the market apparently reacts to a headline as much as anything else."
He acknowledges that it would have been nice if his employee "had been more grounded in what's going on out there in the world." Presumably he means that if his employee had read the article carefully, he or she would have noticed information in the piece that made it obvious it was referring to a 2002 bankruptcy and therefore didn't jibe with the 2008 publication date on the piece. But Lehmann nonetheless attributes the whole problem to how the stock market reacted to his employee's action, not to the action itself.
"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.
Actually, the market reacted exactly the way someone would expect it to react to a headline like this.
The problem wasn't the market, it was the newspaper's archive, which stored the story without a publication date attached to it -- not a completely uncommon occurrence.
The problem was also a by-product of how information is published instantly these days, and passed around the internet, without any independent vetting. The fact that Bloomberg's news service publishes content provided by non-journalist sources -- such as Income Securities Advisors -- without having an editor vet the material first, puts the news service at risk of being caught up in a mistake like this again.
But the problem isn't just Bloomberg. We're all at risk of doing this today when all it takes to publish something is to click "send," and when blogs and mailing lists propagate information that's published elsewhere without independently verifying it. Let's say the information in the United Airlines article wasn't obviously about a 2002 bankruptcy filing. There wouldn't have been any obvious red flags to make someone question the publication date on the piece. Someone would have caught the mistake only if Bloomberg had a regular policy of independently verifying information before sending it to subscribers.
Prior to the internet, if a news outlet like Bloomberg picked up information that another news publication broke, Bloomberg would have made phone calls to vet the information -- as much as that was possible -- before publishing its own story about the subject. That still happens in the case of articles that are published in the print versions of newspapers. But that happens much less with information that's picked up on blogs, and it almost never happens with information that's picked up by online mailing lists and newsletters.
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