SEC: Don't Blame Fat Fingers for Market Freefall

Feds don't know reason, but don't think it was a typo
By John Johnson,  Newser Staff
Posted May 11, 2010 7:45 PM CDT
SEC: Don't Blame Fat Fingers for Market Freefall
Commodity Futures Trading Commission Chairman Gary Gensler testifies.   (AP Photo/Evan Vucci)

Those hoping for a simple answer to what caused last week's stock market collapse—a typo caused by a so-called "fat finger" trading error, for instance, or maybe a malicious hacker—will be disappointed with the testimony of federal regulators today on Capitol Hill. While they simply don't know yet what caused the freefall, they're pretty sure it wasn't triggered by any single event such as those, reports MarketWatch.

The SEC's Mary Schapiro and commodities trading chief Gary Gensler promised to provide preliminary—emphasis on the preliminary—findings next week. Schapiro said SEC investigators have issued supboenas, though she didn't say to whom. One area of possible inquiry, notes Bloomberg: Traders who tried to take advantage of the chaos by purposely driving down stocks. Regulators also are looking at activity in something called the S&P 500 E-Mini futures contract, which the New York Times describes as "by far the largest stock index futures contract"—and sounds infinitely more complicated than fat fingers. (More stock market stories.)

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