The concern I have with this is that it may have exposed (or perhaps was the first one to exploit) a weakness in the way internet news works. Suppose this was how it happened (note that from the stories I've read it is unclear that the first step of this is entirely possible, but it might be at some news agencies that feed google):
- Some crafty person at the Sun Sentinal guessed what might happen if the UAL bankruptcy became the lead story on Google and made Bloomberg. He called a distant friend in Alaska that no one could trace to him and the guy put 100,000 in his eTrade account and then the Sun Sentinal worker posted a new link to the old story.
- He watched as people traversed the internet and happened across the article. They quickly read it and passed it along causing it to become the most popular article at the Sun Sentinal.
- Becoming the most popular story on the Sun Sentinal meant it climbed Google's story rank. After it gained steam there it quickly became a top Google story.
- Bloomberg (the news/ticker tool used by most serious traders) automatically picked up the story because it had climbed Google's rank.
- The stock hit $3. Our Alaska co-conspirator had previously placed a limit buy trade for UAL at $3 (this means that if the stock falls to $3, the stock is automatically purchased). So at 11am, the man in Alaska now has 33,333 shares of UAL worth 100,000.
- Google, Bloomberg and the Sun Sentinal announce the mistake, the stock returns to 11.78 at 12:42 and Alaska buddy unloads his position in UAL for $392,662. He's made almost $300,000 in a little under 2 hours. He does a TV interview or two and tells everyone how lucky he is that his randomly placed $3 buy order came true.
- In a few years, when the SEC investigation has died down our Alaska friend gives are Sun Sentinal friend a couple hundred thousand dollars to start his dry-cleaning and laundry shop.