Did market manipulation cause Wall Street ‘flash crash’?

[deminks]

http://www.rawstory.com/rs/2010/0903/market-manipulation-stock-market-flash-crash/

The Securities and Exchange Commission is keeping a close eye on a stock market practice that may violate rules against market manipulation, the Wall Street Journal reported yesterday. The practice, called “quote stuffing,” happens when stock exchanges are flooded and, at times, clogged by huge numbers of buy and sell orders—orders that are ultimately cancelled.

Regulators are trying to determine if traders are using rapid-fire computerized trading systems to cause the inundation by design, purposefully gumming up the exchanges and giving traders an information advantage on small price movements in stocks.

The Journal reported that the SEC is investigating whether quote stuffing may have been one of the causes of the May 6 “flash crash,” when the Dow briefly plunged 1,000 points in a matter of minutes.

To get an idea of the volume of quotes produced by high-speed, computerized trading, consider this: During the day of the flash crash, “there were hundreds of times that a single stock had over 1,000 quotes from one exchange in a single second,” according to Nanex, a ticker of quotes and trades.

(end snip)

Remember when Wall Street wanted you to believe one fat-fingered trader was responsible for the flash crash?

[EmeraldCityGrl]

1. Anyone with their money in this market is ripe

for fraudulent loss of their investments. I have sued two brokerage firms and won both cases.
More importantly I learned a valuable lesson. We need to see a return to reasonable interest rates
on money market funds and savings accounts.

[mike r]

2. It's best to assume Wall Street is run by crooks

and guard your money accordingly.

[izquierdista]

3. Did the bear defecate in the forested area?

Inquiring minds want to know!