Last week U.S. Securities and Exchange Commission Chairman Mary Schapiro dispelled speculation that a ‘fat finger’ error triggered the Dow Jones Industrial Average to fall as much as 9.2% on May 6.
It seems she may have been right on her assessment.
Based on the latest report from Charlie Gasparino, a fat-fingered trader may not have caused the market plunge two weeks ago, but some type of human error appears to be the source. According to Gasparino, a report by the SEC, which could be made public as early as today, will lay out the causes of the market plunge.
Gasparino points out however, that people with knowledge of the report’s preliminary findings tell him that “there was some human error, or as one person with direct knowledge of the report told him, a “poorly handled order,” at the Chicago Mercantile Exchange (CME), which touched off massive trading in the markets, particularly at the New York Stock Exchange.
FBN: At that point, [notes Gasparino] specialists on the floor of the exchange stopped making markets in various stocks that began to trade lower on other exchanges that don’t slow down trading, as the NYSE does in times of stress.
According to people with knowledge of the preliminary findings, the entire market plunge lasted 17 minutes, but the last three minutes saw a massive amount of selling from retail brokers who sold stock on behalf of individual investors.”