Is the SEC being left in the dust? Politico reports that had the “flash crash” of May 6 continued unabated, that sudden 998-point plunge in the Dow Jones Industrial Average might have turned into the financial equivalent of BP’s deepwater oil gusher, spreading a plume of wealth-destruction across the globe. It would have been different from all the famous previous crashes in history, triggered not by human panic but, it appears, by a screwup in computer networks. Experts warned the SEC a few days before of such a possibility and the vast damage it could cause. But no one believes that the markets’ regulators, including the SEC and the many “self-regulating organizations” that police trading, have the capacity to detect and stop such a catastrophe. As in the oil-drilling industry, there’s a massive technological mismatch.
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