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SEC’s Gallagher says agency looking into bogus AP tweet

By Reuters 24 April 2013

The U.S. Securities and Exchange Commision is looking into a 'bogus' tweet on the Associated Press Twitter account that sent markets into a tailspin on Tuesday, SEC Commissioner Daniel Gallagher said.

Hackers took control of the AP’s account and sent a false tweet about two explosions in the White House that injured President Barack Obama. The false news sent a wave of brief but intense panic selling across financial markets before it became clear it was a hoax.

Thomson Reuters data showed the benchmark S&P 500 index fell 14.6 points, or 0.93 percent, in the space of 3 minutes when the tweet hit the market. With the S&P 500 valued at about $14.6 trillion at the time of the false tweet, the plunge briefly wiped out $136.5 billion of the index’s value.

“You can rest assured we’re looking into it,” Gallagher said in an interview to be aired on Reuters Digital TV later on Tuesday.

“I can’t tell you exactly what the facts are at this point or what we’re looking for, but for sure, we want to understand major swings like that, however short it was,” he said.

After the “Flash Crash” on May 6, 2010, when the Dow Jones industrial average plunged hundreds of points in a matter of minutes, the SEC has taken a number of measures, including introducing single-stock circuit breakers designed to dampen extreme volatility in markets.

Seeing how some of those measures held up during Tuesday’s volatility will be an important test of the effectiveness of the SEC’s measure, Gallagher said.

“It’ll be interesting to see what, if any, circuit breakers were triggered, because obviously that’s been a large part of the commission’s market structure agenda for the last couple of years since May 6,” he said, referring to the 2010 “flash crash.” DM

Photo by Reuters.

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