Monday, May 10, 2010

Wall Street Cyber Terror Attack?

In all my years in this business, never have I witnessed what took place last week and it begs the question, What really happened?

Were we attacked through the various electronic exchanges that exist today?

Since we still haven't received any answers and given the fact we have been attacked lately in a traditional terrorist sense, this has to be considered since it is unlikely that true sellers were panicking out of their positions to cause a 1000 point selloff in 5 minutes only to change their minds in a flash and bring the indexes back up just as fast.
I also have to be skeptical about the dismissal this week by homeland security officials about this possibility.

I mean if it were true, do you really think they would admit this? If they did, what would happen to the markets if people thought their investments could possibly get wiped out by an enemy combatant.

All the signs are there in terms of the label "targeted attack".
For example, 2 stocks with the biggest index weighting of the Dow Jones were taken down to have the most impact on the index value. Also, Accenture, a company engaged in IT consulting and security systems for the financial markets in particular was taken down to a price of $0.

This is a scary thought, I admit but former security officials like Richard Clark have been warning of this for the last several years and since I have never seen selloffs of this magnitude in such a short time frame without explanation, then we must consider the future possibilities that an all electronic trading system without the benefit of the former specialist trading curbs and a reinstatement of the uptick rule for shorting will raise the likelihood that it will happen again.

As a result of the event, several thousand trades were cancelled by the exchanges and there are no disclosures of whose trades were cancelled, why those particular trades were cancelled, and finally which I think is the most important question, Is who made the most off this event as well as who got wiped out.

All this tells me that the public is not getting the truth because these things can be traced in terms of actual trading executions unless these records were also erased or covered up.

So be careful how you proceed until there are actual answers.