Feds: Firm Blamed for May 6 Market Plunge

Federal regulators say a large trading firm's use of a computer sell order triggered the May 6 market plunge, which sent the Dow Jones industrial average dropping nearly 1,000 points in less than a half-hour.

A report issued Friday by the Securities and Exchange Commission and the Commodity Futures Trading Commission determined the so-called "flash crash" was caused when the trading firm executed a computerized selling program in an already stressed market.

That set off two waves of "liquidity drains", when market players swiftly pull their money from the stock market.

The Dow Jones was down about 2.5 percent at 2:30 p.m. when the trader, which the report does not name, placed an enormous sell order on a futures index of the Standard & Poor's 500 stock index. The trade on the E-Mini S&P 500 was automated by a computer algorithm that was trying to hedge its risk from prices declines.

The trade triggered aggressive selling of the futures contracts and that sent the index down about 3 percent in four minutes.