Report: SEC looks into posting of old United story

SEC launches preliminary inquiry into online distribution of old article about United Airlines bankruptcy that led to a stock drop, according to a newspaper report.

Updated 4:50 p.m. PDT with Google comment.

Officials at the U.S. Securities and Exchange Commission are wondering if there was any improper conduct behind the online release last weekend of a 6-year-old news story that lead to a 75 percent drop in the stock of United Airlines on Monday , according to The Wall Street Journal (subscription required).

The SEC has opened a "preliminary inquiry" into the online distribution of a Chicago Tribune article from 2002 about United Airlines' bankruptcy filing, people familiar with the matter said.

The Tribune Co. said in a statement on Wednesday that it believes a single visit to the archived story on the site of its South Florida Sun-Sentinel newspaper during a low-traffic time period resulted in the computer system displaying it under a tab titled "Popular Stories Business: Most Viewed."

The article was then picked up by Google News and displayed with no indicate of the original date of publishing. It was later distributed by Bloomberg.

Google's automated search agent "Googlebot" misclassified the article because it is unable to differentiate between breaking news and frequently viewed stories on the newspaper Web sites, the Tribune said, adding that it had asked Google to stop crawling its sites month ago, but the process had continued.

Asked for comment, Google spokesman Gabriel Stricker said: "The claim that the Tribune Company asked Google to stop crawling its newspaper Web sites is untrue."

Google's crawler had no reason to suspect that the article was old, according to a Google News blog that was first posted on Monday and updated on Wednesday. "The article failed to include a standard newspaper article dateline, but the Sun-Sentinel page had a fresh date above the article on the top of the page of "September 7, 2008" (Eastern)," it said.

This is the latest in a series of false market rumors. The SEC brought a case earlier this year against a short-seller who allegedly spread false information about a pending takeover, and is also investigating short-selling of Bear Stearns and Lehman Brothers stock, according to the Journal.

John Reed Stark, head of the SEC's office of Internet enforcement, declined to comment on whether the agency is investigating the posting about United Airlines, which emerged from bankruptcy in 2006.

"Anytime anyone spreads false information over radio, TV, Internet message boards, or chat rooms about a public company that will raise questions as to whether someone is committing securities fraud," he told the paper.

 

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