Untrustworthy information
United Airlines shares plummeted to 1 cent this morning after news that the company was in bankruptcy.
Only problem was, the report was untrue.
We don't yet know the source of this misinformation, whether it was a mistake or a deliberate plot to manipulate the share price. But as any policeman investigating fraud knows, what happened once by accident can be made to occur repeatedly on purpose.
When the New York Times was published on paper, distribution of a fake edition would be next to impossible. Today the New York Times is published on the Web and if there is a difference between the online and print editions, most people will assume that the online edition is the most up to date, and therefore the most trustworthy.
We have cryptography for bank transactions but almost none of the information channels that people receive financial information from are protected. Certainly not the New York Times, or Bloomberg or Income Securities Investor, the site cited as the source of the mistaken UAL report.
Shouldn't we start insisting on security here as well?
A final thought, in the past it has always been assumed that the threat of cyber-terrorism would come in the form of a denial of service attack or the like against the financial markets. The old anarchist strategy of destroy the bourse and you destroy the system. But what if the attackers are smarter than that and instead of trying to take the NASDQ and NYSE offline they attack it by feeding it bogus information?
Update It appears that the stock's rapid decline was driven by stop-loss orders. The original source of the article appears to be a Chicago Sun/Sentinel story on the original UAL bankruptcy six years ago. How the story got out is still unclear. But with 27 million shares traded, lawsuits are sure to follow.
