Anytime anyone spreads false information about a public company over a communication medium like the internet, its message boards, chat rooms or otherwise, that will raise questions as to whether someone is committing securities fraud.
- John Reed Stark, head of the US Security and Exchange Commission's office of internet enforcement
In Joanna Chung and Justin Bear, "SEC Probes United's Sudden Slump," Financial Times, September 12, 2008
The web's power over people's understanding of reality became quite vivid on news on September 8, 2008, when United Airlines stock lost more than 75% of its value because a 2002 article about its bankruptsy filing that had been published that year the South Florida Sun-Sentinel (owned by the Tribune Company) mistakenly appeared on Google News. The appearance led readers on the site to believe it was happening that day, and they responded by selling the stock. A few days later, US security regulators opened an informal investigation of how that happened.
It seems that the glitch began when on early Sunday morning a single visitor to the Sentinel website viewed the 2002 story reporting on United's bankruptcy filing. That visit was enough to have the old article land on the Sun-Sentinel's most-viewed list at that hour. "Google said its web-trawling program spotted the link and indexed it as a new story when it could not find a 2002 dateline. Tribune has said it would have been obvious to a reader that the article was six years old."
Each company, in other words, says that the mistake was the other's fault. United, in the meantime, is considering filing a lawsuit against both. The lurking question: Will--or when will--this sort of agenda-setting mistake happen again on Google News or elsewhere on the web, and with what consequences?
Wednesday, September 17, 2008
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