This isn’t a story about security (although it is about securities), but it’s so remarkable I thought I’d include it here anyway.

A worker at a Miami investment advisory firm called Income Securities Advisor, which publishes news alerts that get distributed through the Bloomberg News Service, did a Google search on bankruptcies this morning and got back search results that included a six-year-old story published in the South Florida Sun Sentinel about the 2002 bankruptcy filing by United Airlines.

The employee mistook the news for a current story — despite the date clearly marked on it (see update below) and other information in the article “that would clearly lead a reader to the conclusion that it was related to events in 2002″ — and included it in a subscription newsletter that was distributed through Bloomberg.

Panic ensued, as they say, and United Airlines stock price plummeted 75 percent (down from $12.30 to $3 a share) before someone realized it was an old news story and things righted themselves. The stock rebounded to $10.92 a share by Monday’s closing. But not before United Airlines contacted the Sun Sentinel and demanded the newspaper retract its (6-year-old) story.

UPDATE 1: The head of Income Securities Advisor is now saying that the article had a current date on it. Or maybe the article had no date on it. His account to various news outlets is inconsistent.

Either way, what seems to be clear is that the archived article appeared within a frame of current headlines — which is how many web sites display archived material, to draw readers to current stories. What could have happened, was that the person who read it didn’t see a date on it but saw current headlines around it and jumped to the conclusion that the United Airlines piece was current.

UPDATE 2: The story gets more convoluted and more interesting. According to a follow-up investigation, the article in the Sun Sentinel’s archive had no date on it. But when Google’s spider grabbed it, it assigned a current date to the piece, which then resulted in the article being placed in the top results of Google News. When the employee from Income Securities Advisor ran a Google search on “2008 bankruptcies,” the old United Airlines story appeared as the top link in the results, with a September 6, 2008 date on it. (Apparently Google and others have now been able to produce screenshots that verify this.)

At 11 am Monday, the employee added the story to a feed that is included in a Bloomberg subscription service and within minutes, 15 million shares of United Airlines stock had been sold before trading on the stock was halted.

As I wrote at the top of this post, it’s surprising something like this hasn’t happened before.

But, unfortunately, it looks like the wrong lessons are being learned from this. Richard Lehmann, president of Income Securities Advisors, told the Washington Post that the incident “shows (that) the market apparently reacts to a headline as much as anything else.”

He acknowledges that it would have been nice if his employee “had been more grounded in what’s going on out there in the world.” Presumably he means that if his employee had read the article carefully, he or she would have noticed information in the piece that made it obvious it was referring to a 2002 bankruptcy and therefore didn’t jive with the 2008 publication date on the piece. But Lehmann nonetheless attributes the whole problem to how the stock market reacted to his employee’s action, not to the action itself.

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