http://www.nytimes.com/2010/11/09/business/09flash.html
The Flash Crash, in Miniature
By GRAHAM BOWLEY
Published: November 8, 2010
BlackBerrys were buzzing inside Progress Energy in Raleigh, N.C.: in a blink, the 102-year-old utility had been virtually wiped out on Wall Street.
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And to corporate executives caught in the middle, it is all just plain hair-raising — and still puzzling.
That September afternoon, with fearful investors on the phone from New York, Mark F. Mulhern, Progress Energy’s chief financial officer, was told by the exchanges that it was all a mistake. A wayward keystroke by a trader somewhere had unleashed a powerful computer algorithm that had devoured Progress Energy’s stock in moments.
Progress Energy stock was trading at about $44.57 a share, and a dealer at an unidentified brokerage firm had entered a mistaken sell order into a computer that instantly drove the price to $4.57. Dozens of trades were declared void, and after a five-minute halt, normal trading resumed.
Mr. Mulhern says he still does not really know what caused the sell-off — and worries what mini flash crashes like this one are doing to investors’ confidence in the stock market.
“It is a little disconcerting when a trade like this could cause this kind of havoc,” he said. “It has got implications for the confidence in our markets. I don’t know what caused it, to tell the truth. The one hesitation all investors have about the market is the drift to so much electronic trading. It is so fast and real time, you have to wonder a little bit how these things happen, and can the regulatory procedures, the stop measures, can they really keep up with the technology?”
Robert F. Drennan Jr., the vice president for investor relations at Progress Energy, said he had reviewed the trading records and had noticed unusual trading activity in the run-up to the plunge. He said Progress Energy was not a heavily traded stock; it may go for several seconds without a trade. But before the price fell, “There was a big ramp-up in the trades, hundreds of trades a second,” he said.
Mr. Mulhern said he received calls from worried investors, including hedge funds: “When the hedge funds call up and start to complain, you know you have a problem.”
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Wow thanks a lot Maggie now it really makes you wonder if that fat finger pushed on purpose.
Good find maggie. Makes you wonder who is manipulating these things and for what purpose. I was reading last night that Progress Energy was not on board with Obama’s energy bill and made public comments that it would drive up the cost of energy to levels never seen before in this country. I wonder if this was payback or a chicago way warning?
Perhaps that problem was “solved”.
Great find, maggief.