don’t know much, but it’s interesting… the big market collapse

So.  Just what happened that one day in 2010 when… out of nowhere… the stock market dived and collapsed?

Some guy did it.

On Tuesday, United States prosecutors said that much of the blame for the event could be pinned on a single person: a 36-year-old man who had been boldly manipulating markets from his suburban rowhouse just a few minutes from Heathrow Airport outside London, where he was arrested. […]

For the latest case, it took the authorities five years to track down a rogue actor making enormous trades. And, they were led to him only with the help of an outside whistle-blower.

Reading this skeptical report...

The flash crash was essentially over in five minutes. But it took regulators nearly five months to come up with a theory about what happened. And in late September 2010, when the SEC and the CFTC—the same agency now charging Sarao with causing the crash—released a joint report on what happened, they didn’t mention spoofing, let alone Sarao. Instead, they blamed a large trade by a firm out of Kansas City.

It’s not even clear that the feds’ new explanation is correct. As Matt Levine notes over at Bloomberg View, regulators believe that Sarao continued to place massive fake sell orders in the years after the flash crash, but somehow that activity never triggered another crisis…

In any event, more questions from sources that at first glance strike me  not without their own agenda.

Shall we believe that a single low-tech trader living in a leafy street of a London suburb contributed in any significant way to the Flash Crash?
Who said the Age of the Lone Amateur unencumbered by the Massive Organization is dead?

Was Waddell & Reed behind the unnamed whistleblower in an effort to clean its name and enhance its reputation?
Leading question.

Wasn’t one Flash Crash enough to better police the markets and stop Sarao for good?

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