This Has To Be A Joke: SEC About To Blame Entire Flash Crash On Waddell And Reed's E-Mini Trades

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Thu, 09/30/2010 - 16:38 | 616573 ATG
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Anyone watch the Senate Finance Committee hearings today with heads of Government Regulatory Departments reading scripts at third grade level?

Thu, 09/30/2010 - 22:56 | 617382 StychoKiller
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Hukd on foniks wurkd reel gud for mee!

Thu, 09/30/2010 - 16:35 | 616574 Conrad Murray
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Thu, 09/30/2010 - 17:26 | 616727 bigdumbnugly
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waddell and reed, eh?

i thought they had ample video evidence already against some woman named debbie in dallas?

Thu, 09/30/2010 - 17:38 | 616746 subqtaneous
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yeah, weren't they just the two old gents selling wine coolers from the front porch?


Thu, 09/30/2010 - 22:57 | 617383 StychoKiller
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"Thank you for your support." -- Bartles (or was that James?)

Thu, 09/30/2010 - 16:36 | 616579 Jeff Lebowski
Jeff Lebowski's picture

You were right earlier, Tyler...

Fuck it.

Thu, 09/30/2010 - 16:36 | 616580 andybev01
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If Waddell & Reed wield that much power where can I apply for a job?!

Thu, 09/30/2010 - 16:40 | 616598 ATG
Thu, 09/30/2010 - 16:50 | 616638 Assetman
Assetman's picture

Not only that, but... I didn't know that algos could be spooked.

Thu, 09/30/2010 - 17:02 | 616678 Divided States ...
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Their site is still up, for now.....but soon to be shut down for SEC investigation.

Wonder which small advisory firm they will throw under the bus after the next flash crash.


Thu, 09/30/2010 - 22:59 | 617388 StychoKiller
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We need braver robots, like Bender Bending Rodriguez!

Recruit from the "Robot Fighting League."

Thu, 09/30/2010 - 17:23 | 616722 Billy Ray Val
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It was the Dukes!  It was the Dukes!

Thu, 09/30/2010 - 22:16 | 617297 Hrundi V. Bakshi
Hrundi V. Bakshi's picture

someone owes a dollar to waddell and reed for winning the bet to crash the market.

Thu, 09/30/2010 - 16:38 | 616582 Spalding_Smailes
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Straw Man' Bitchez

The origins of the term are unclear;  given is that it originated with men who stood outside courthouses with a straw in their shoe in order to indicate their willingness to be a false witness.

Thu, 09/30/2010 - 18:06 | 616815 traderjoe
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And once again the dofuses in charge miss the unintended consequences.

If it was so easy to start a flash crash (one firm placing a middle-sized order) doesn't that mean it could happen again at any time?

It would be a better cover story to suggest it was a strange confluence of a vast array of circumstances that would be virtually impossible to replicate. Hell, blame it on those aliens anticipated by the UN or that messed with the nukes. A futures order placed to hedge exposure? Any day now...


Thu, 09/30/2010 - 16:36 | 616583 centerline
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Insulting to those who don't buy it.  Condemning to those who do anyhow.  Either way, another nail in the coffin has been pounded into place.

Thu, 09/30/2010 - 16:56 | 616653 Eternal Student
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The question is, who's coffin? The SEC is going to look incredibly silly (or sillier) going forward, as it becomes increasingly obvious that they either don't know what's going on, or are deliberately choosing to ignore the problem.

This is basically an infowar problem. You've got lots of people, driven by lots and lots of money, trying to hack the system, with the potential reward of some really big bucks. The flash crashes are simply the first by-product of this effort, and the way these things work is that you can expect it to escalate. I wouldn't be surprised to see it move up so that the bot creators start trying to hack the other bot creators.

The end result of this will be (as these things always are) an unexpected outcome. Someone trying to outsmart someone else, with unintended consequencies. There's a good chance that the next big crash won't be a flash one, but triggered by such.

By the time this happens, the SEC will be left wondering what the heck just happened, and looking even more silly.

As for who's coffin, I suspect all of us will be jumping in.

Thu, 09/30/2010 - 23:00 | 617390 StychoKiller
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Everybody KNOWS it was Libyan Hackers with their '286 Turbo PCs! :>D

Thu, 09/30/2010 - 16:36 | 616584 Mr Lennon Hendrix
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Insulting our intelligence?  The Government?  Naaaah!  Where the hell is my HOPEum pipe?

Thu, 09/30/2010 - 17:01 | 616674 LostWages
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I prefer Hopium blunts.

Good to know that in addition to having best politicians money can buy, we also add to the list regulators too.

Thu, 09/30/2010 - 17:14 | 616697 Problem Is
Problem Is's picture

Smoke them green shoots, bitchez...
Makes Obummer-nomics "No Bankster Left Behind" (NBLB) more palatable...

Thu, 09/30/2010 - 17:31 | 616738 Rainman
Rainman's picture

This news leaks nearly 5 months after the Flash fact and at the 3rd quarter time out so as not to disrupt the magical "Recovery September" upflow. All a coincidence, of course.

Or maybe waterboarding the W&R crew to take the fall took longer than projected. 

Thu, 09/30/2010 - 16:37 | 616589 iota
iota's picture

Scapegoat, what!


Thu, 09/30/2010 - 16:37 | 616590 Ragnarok
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If true, then these are the last desperate throws of a corrupt and bankrupt system.

Thu, 09/30/2010 - 17:00 | 616670 Cognitive Dissonance
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I suspect there are plenty of desperate throws, grabs, lurches and projectile vomiting left in this corrupt and bankrupt system.

Take a stroll down American economic history if you wish to see what's coming round the corner. We ain't seen nothing yet. We're just beginning to separate the liars from the pathological liars from the sociopaths from the criminally insane from the hidden hands.

I would say we're only now turning the page to the middle of the novel where things begin to get hot and heavy. We've got a long way to go before revolution. See, it isn't about whether you and I are ready. The question is this, is the butcher, the baker and the candle stick maker ready? Or to update this a little, is the school teacher, the nurse and the office worker ready yet?

I think not. They still have plenty of false hope and denial to burn through. As long as they'll listen to the "Change you can believe in" meme, or whatever both parties come out with in 2012, nothings going to happen. It's only when they no longer believe in hope and change, only then will they pick up a rock and a stick and beat a new system out of the old one.

Thu, 09/30/2010 - 17:19 | 616710 Cammy Le Flage
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We're just beginning to separate the liars from the pathological liars from the sociopaths from the criminally insane from the hidden hands.


CD - Is that even possible in a realistic world?  Great description.

Thu, 09/30/2010 - 19:21 | 617001 euclidean
euclidean's picture

OK, so this might not be the cause of the Flash Crash as we know. But on a stranger sidenote-

If the SEC report does not name the party (assuming it 'is' W&R), how certain are people that W&R are the ONLY ones to have traded E-minis this way? That is how can ZH and Bloomberg nail W&R as the single entity?

Say for instance W&R had prior suspicions of a market top as they might be screen whores keenly interested in flagging trends in realtime, so went into May with a short bias. Even if it was a covering short trade while long from the previous rally. End of April was enough of a signal to sensibly short equity indexes.

When things went bad quickly theirs wouldn't be the only eyes glued to an attractive short. But why are they the 'only' ones singled out? I don't get this bit - what was so particular about W&R that stands out on it's own? They were on the ball from what I can see.

Thu, 09/30/2010 - 19:44 | 617051 tip e. canoe
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"But why are they the 'only' ones singled out?"

"Oh my gosh Toto, I don't think we're in Kansas anymore!"

Thu, 09/30/2010 - 19:23 | 617008 Vernon Wormer
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I'm a teacher. I'm ready.

Thu, 09/30/2010 - 20:20 | 617110 espirit
espirit's picture

+1 - Very good reply C.D.

They have yet to struggle with the possibility that their retirement entitlement may not be there when they retire. Nobody cares but for themselves anymore, so it will only happen when the majority are on the down & out. So many will have gone before them, but it is planned not to happen all at once.

Thu, 09/30/2010 - 17:21 | 616721 tmosley
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It's funny.  There's this feeling in the air that has gotten a lot stronger over the last few days.  It's like that feeling when you had a few too many, and you head to the bathroom, and you know you are about to throw up, but you don't want to.  You really don't want to.

Once it starts, there won't be any stopping it.  It'll just keep coming out, until it's all there in the toilet bowl that used to be the American economy.

Thu, 09/30/2010 - 19:48 | 617058 Dagny Taggart
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That is an apt analogy. I usually puke after looking at my portfolio on POMO mornings. Really. It's a new eating disorder, Front-Running with the Fed.

Thu, 09/30/2010 - 22:12 | 617311 New_Meat
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what is keeping me so sveldt.  Gotta keep that Rusty away. - Ned

Thu, 09/30/2010 - 16:38 | 616594 curbyourrisk
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Ya know what.....If the SEC blames them for wiping out $850 billion in equity in a matter of hours.....  Where will the fines be??  What about some prosecutions???  I know it was not their fault...but if the SEC is going to lay the blame at their feet...they better do something....  Othwise they are just showing they truly are impotent...



Thu, 09/30/2010 - 16:49 | 616630 DaveyJones
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porn addicted eunuch. Kind of somes up the vigor and vitality of our system

Thu, 09/30/2010 - 17:26 | 616711 bigdumbnugly
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spineless eunich geldings 

Thu, 09/30/2010 - 17:16 | 616704 Problem Is
Problem Is's picture


Best of the week. Nobody is topping that one by Friday closing, curby...

Thu, 09/30/2010 - 16:40 | 616600 EscapeKey
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Hey, SEC enforcers, look over there while we put som money in your back pocket.

Thu, 09/30/2010 - 16:42 | 616604 DarkMath
DarkMath's picture

When does the SEC ever go after the big guys? They left Bernie Madoff alone but caught Tyler. And guess what we're better off for it. Bernie got his in the end (pun intended) and so will the others.

Thu, 09/30/2010 - 16:42 | 616605 ZeroPoint
ZeroPoint's picture

You can't make policy recommendations based on complete and utter bullshit. That's why there's none to be had.

We might as well go back to a 19th century style trading system. It would be onerous bringing bushels of wheat to market, but at least the HFT Matrix wouldn't be fucking over your trades.

Thu, 09/30/2010 - 16:50 | 616640 DaveyJones
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and the little guy could make some bread

Thu, 09/30/2010 - 16:43 | 616608 TheGoodDoctor
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Well you know it's gonna get stranger, so let's get on with the show.

Thu, 09/30/2010 - 16:45 | 616619 I Am Not a Copp...
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Thu, 09/30/2010 - 17:22 | 616715 I Am Not a Copp...
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Thu, 09/30/2010 - 19:02 | 616952 Clampit
Clampit's picture

It's never gotten strange enough for me.

Thu, 09/30/2010 - 16:44 | 616615 Turd Ferguson
Turd Ferguson's picture

"The bigger the lie, the more likely it is to be believed".

This is Propoganda 101, boys and girls.

Hush now. Shhhhh. The sheeple are sleeping.

Thu, 09/30/2010 - 16:45 | 616616 WaterWings
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Hey, Mary, check out this new tranny material I found.

Thu, 09/30/2010 - 17:00 | 616669 EscapeKey
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Does anyone have some SEC email addresses we can send porn to?

Thu, 09/30/2010 - 19:08 | 616967 goldmiddelfinger
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Knock youself out

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