Friday, September 12, 2008

SEC Looks Into UAL Stock Scare; Implications For Online News?

The backstory: a six-year-old news story about UAL declaring bankruptcy made it into the Tribune-owned Sun-Sentinel‘s current news flow, was picked up by a Google (NSDQ: GOOG) News bot and, via a reporter for a newsletter, made it onto Bloomberg News. After a lot of buck passing, Tribune finally admitted that the story did appear in its news flow while Google continues to insist its bot was just doing its job. That leaves us with the human who read the story after it came up during a routine Google News search on the term “bankruptcy” and shoveled it onto Bloomberg News, where the stock proceeded to plummet before anyone realized what was happening. Now, the WSJ reports, the SEC has opened a preliminary investigation into how the story resurfaced. It may not turn into a full investigation but a lot of investors felt the impact Monday and those trades aren’t being reversed. However it came about, the incident is the latest in a series of false market rumors. We experienced one effort a while back when someone sent out a faked press release about IAC; similarly, in May, Barry Diller expressed concerns about rumors targeting Expedia and moving the stock. This one is different, though, because it calls into question the systems used for archiving news and making it instantly available online. The Tribune says the story made it into the current news flow because of one person visiting the article at 1 a.m. Sunday morning and that pushed the story into the business section’s “most viewed” list, which is where Google News found it Sunday afternoon after someone else clicked on the link. In an interesting insight into Google News, the first inbound link came in three minutes later. But the major trouble began when Income Securities Advisors put it on Bloomberg News—and getting it there had nothing to do with bots. So are there implications for online news?

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