15 Weeks On, Flash Crash Incident Still Baffles, Ominously
Months later, analysts are still seeking the cause of the quick and mysteriously plunge of the stock markets - by 600 points - and then, more mysteriously, recovering within minutes. As the NYT reports, some suspect a conspiracy.
After almost five months of investigations, the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission issued a joint report identifying the cause that set off the sequence of events leading to the Flash crash. The report found that the cause was a single sale of $4.1 billion in futures contracts by a mutual fund, identified as Waddell & Reed Financial, in an aggressive attempt to hedge its investment position. Already eleven days after the flash crash it was reported that Waddell & Reed's huge sale of E-mini contracts might have triggered the crash. The final government report has been criticized for not offering "thorough proposals" on how to avoid similar events in the future.