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Why Did the Stock Market Think United Filed for Bankruptcy?

You may have noticed that United’s stock dropped from $12 to $3 briefly yesterday after an erroneous report that it filed for bankruptcy.  If you dumped your stock at $3, you’re out of luck – NASDAQ says that it won’t cancel trades based on faulty info.  Oops.

So, how did this happen?  Nobody’s quite sure.  For some reason, Ft. Lauderdale’s Sun Sentinel had a 2002 story about United’s bankruptcy posted on their website and had the story listed with yesterday’s date.  For its part, the Tribune company, which owns the Sun Sentinel, says that the story was automatically highlighted because Google’s crawler highlighted the story out of the archives.  Google, as you’ve probably guessed at this point, says that it only highlighted the story because the Sun Sentinel pulled it out of the archives and put it on their site.  And round and round.

Long story short:  United is not going bankrupt.

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  1. This is the best article I’ve read on the subject:

    http://www.washingtonpost.com/wp-dyn/content/article/2008/09/08/AR2008090803063.html?referrer=emailarticle

    Ironically, the only people who got seriously hurt by this mistake were the folks who owned UA stock and thought they were being smart by placing a “stop loss” order to sell their stock in case disaster struck and it plunged. Those people had their orders triggered by the sell-off, and wound up selling far below true market value. So far, it looks like tough luck. Personally, I’ve always been very leery of “auto pilot” stock trades, and this further confirms my belief.

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