For the massively sophisticated technology that traders rely on to execute a reasonably well-informed trade at a moment’s notice, it’s been a bad week. First, the London Stock Exchange suffered a humiliating seven-hour computer system failure on Monday. While the LSE was out of action, traders elsewhere scored one of the most profitable days of the year.

Around the same time in the United States, a six-year-old article declaring United Airlines was filing for bankruptcy protection was somehow recycled by Google and presented as fresh news, sending shares in the already battered airline down a staggering 75 per cent. Despite reassurances that the airline is not dead (yet), the share price still hasn’t fully recovered.

The LSE malfunction is hard to pardon. This is the world’s third largest exchange. There is no back-up plan when brokers cannot connect to the trading system? But at least there is some comfort in the fact the system was not paralysed by heavy trading volume, but rather by a software glitch, suggesting once fixed, the LSE should function smoothly again. Sure enough, the past two days have been free from incident.

The curious tale of the United Airlines headline is more worrying. Two days on, and nobody seems to have a clear answer how it happened. This kind of glitch could easily happen again and again.

Here’s how it played out. The article about United Airlines goes back to 2002 when the company did in fact file for bankruptcy protection. (It has since re-emerged and is fully solvent.) The six-year-old article had been sitting in the archive of the South Florida Sun Sentinel’s web site, when, on Sunday, without explanation, enough people clicked on it to make it one of the paper’s most viewed stories for the day. This caught the attention of Google’s spiders, which skim the net for prominent news stories then post them to Google News.

When Google indexed the story on Google News, it slapped the date “September 6, 2008” on the old article. Meanwhile, a financial news aggregator spotted the “fresh” bankruptcy story and forwarded the details to Bloomberg, the financial news wire that it works with. Bloomberg then dutifully blasted out the headline "UAL Corp: United Airlines files for Ch. 11 to cut costs" to its subscribers. By Monday morning the historic sell-off had begun. United issued a statement to quell the panic, but the damage was done:

What is remarkable is how much human error was involved in turning a technical glitch into an investor’s nightmare. Yes, Google bots incorrectly time-stamped the story to make it look legit. But fault also lies further down the chain. It fooled two groups of professionals – a Florida investment firm, Income Securities Advisors Inc., who first spotted the story and published it to an investor news bulletin; and the Bloomberg reporters who subsequently published the details on its newswire – and they should have known better. First clue: UAL’s share price in the 2002 article was $0.97, way off the $12 it was trading at on Monday to start the trading session. And, as the Associated Press reports, the story in question contained comments that dated back to 2002. Didn’t anybody read the article before broadcasting the details to the wider investor universe? Knowing news wires as I do, I can say ‘not a chance’ – the value of a reporter is judged first on how quickly he can type, secondly on his news judgement; not all that different from a bot if you think about it. United shareholders were doomed the moment a seemingly legitimate news authority – in this case, the Google News bots – gave it the stamp of approval.

In the fallout, Google, Tribune Co. – the owner of the newspaper, the South Florida Sun Sentinel, and Bloomberg cannot seem to agree on who is to blame for the slip-up that has cost investors tens of millions. Tribune Co. points a finger at Google for the erroneous time stamp. Google, for its part, says the Sun Sentinel failed to date the story clearly in the first place, making it appear like a fresh story. Here’s one instance where shareholders would have been praying for an LSE-sized blackout on Monday. It would have been much less costly.

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Bernhard Warner, a freelance journalist and media consultant, writes about technology, the internet and media industries. He can be reached at techscribe@gmail.com