United Airlines plunged on Monday [Sept. 8] after a false report that the carrier had returned to bankruptcy court surfaced on the internet.
A six-year-old Chicago Tribune story on United’s 2002 bankruptcy filing, spotted on a Google search on Monday morning by an investment newsletter, triggered a massive sell-off of the carrier’s shares until trading was halted. The stock reached a low of $3, then rebounded once trading resumed to close at $10.92. Shares had ended the day at $12.30 on Friday.
The facts underlying the story sounded like a plot line from Kurt Andersen's Turn of the Century:
United had refuted a report by late morning in New York, but not before the stock lost more than 75 per cent of its value. The shares appeared to trade at 1 cent, the default price assigned following its halt.
Attorneys for the airline and the newspaper group have continued to grapple over how and why the story reappeared now, on the website of another Tribune-owned newspaper, the South Florida Sun-Sentinel, people familiar with the matter said. The episode has also caught the attention of securities officials.
United said the reports were “completely untrue and were caused by the irresponsible posting of a six-year-old Chicago Tribune article”.
United’s shares began to sink minutes after a distressed-debt newsletter published a summary of the Tribune article on the Bloomberg wire and a link to the Sun-Sentinel website.
Richard Lehmann, president of Income Securities Advisors, the newsletter’s publisher, said his company found the Sun-Sentinel piece through a general search on Google’s news page.