Ranjeet Walunj

September 11, 2008

Technology glitch brings UAL stock down

I was going through slashdot and one bizzare incident was reported on it.

Google’s news tracker/crawler, fetched a news from some old reprint of an article from Dec 2002 when United Airlines was on the verge of bankruptcy.

United airlines later on managed to get out of the situation after that.

However google crawled it as latest news since the reprint did not mentioned about any of the date.

Soon every other news reader/aggregators grabbed this incorrect information from google’s news and soon started spreading this news across market.

After some time this news appeared on Bloomberg and the stock price of UAL dropped to $3.00 from the opening price of $12.50. Trading was suspended after that.

And after clearing the doubts stock prices rose back to around $10.00 which is still lesser than the actual opening price.

UAL 8 sep 2008 fiasco due to incorrect news

UAL 8 sep 2008 fiasco due to incorrect news (Source yahoo finance)

Google cannot be blamed for this mistake. But some people might have jumped the gun as soon as the news appeared on Bloomberg and started selling off their stock. People should get into a habit of checking news and then taking financial decisions.
Thought the incident clearly shows the power of internet in todays world.

Few smart people would have made money after checking the authenticity of the news and riding on the fall or rise 🙂

How does it affect any other market ?

I was wondering whether these features can be manipulated to rigg stock prices up and down ?

If someone creates a news site where he artificially creates/modifies/brings older news back to current threads about certain stocks where he wants to manipulate for his benefits.

That opens another possible rigging opportunity for operators/manipulators in market.

Or to avoid these kind of situation should news crawlers try not to crawl news without timestamps ?
Or should there be a need for moderators before news gets published/indexed by crawlers ?

We all know that there are other ways of manipulation in stock markets and we seriously do not wish to add another possibility of manipulation.

References:

Slashdot news : Automated news crawling evaporates $1.14B

Wallstreet:   UAL story blame is placed on computer

Atlanta business chronicle : Google crawler, clicks may have pushed 2002 UAL bankruptcy story to top

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1 Comment »

  1. Hey yes this idea has been mentioned in the Register. So it could happen.

    Markets are riggable because there’s not enough information – corporations keep things secret until they have to publish, and the analysts have to rely on rumours – old ones at that.

    Time to open up things, let markets have better, real-time business information, let capitalism rebuild trust through transparency.

    Comment by ejoftheweb — September 11, 2008 @ 3:02 am


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