UAL stocks tanked — and we mean tanked — when a headline that flashed across trading screens erroneously reported that the carrier was filing for bankruptcy. That triggered a panic and UAL shares lost almost all of their value before Nasdaq halted sale of the stock about an hour later. In fact, the stock lost more than a billion dollars before trading was stopped, according to The New York Times.

Turned out, the headline was based on an old news story — a waaaay old news story. United filed for bankruptcy in 2002. But, as the Financial Times Web site says:

Investors accepted the article as news that the Chicago-based airline had once again sought protection from creditors, a scenario that had grown more feasible in the past year as jet fuel prices skyrocketed.

UAL stocks resumed trading and recovered somewhat after the mistake was discovered and a correction issued. But a lot of shareholders may have seen their stock sold out from under them anyway — especially if they had automatic “stop-loss” sell orders triggered by the plunge.

How could such a thing happen? It’s complicated. The New York Times says an article on the The South Florida Sun-Sentinel Web site (the paper says it was in the archives, not live on the site) was picked up by research firm Income Securities Advisors, which then posted a link to it on a page on Bloomberg News, which sent a news alert based on the old article. NY Times has all the dirty details.