I told you so…the SEC has confirmed it will investigate the trading in Facebook this morning. Here is the response I got from the SEC:
“As is our practice, staff will review the incident with Nasdaq to determine its cause and steps that will be taken to address it.”
In case you haven't heard, orders to buy or sell prior to the Facebook stock opening did not get confirmed for hours. This meant that if you had an order to, say, sell 100,000 shares, you did not get confirmation that the trade had been executed for hours later — into the afternoon. That meant you didn't know where you stood in your tradebook. You couldn't decide if you needed to buy more, sell more, whatever. Major time risk.
What happened? It's not clear, but it is pretty clear that the technology did not hold up under the weight of the message traffic.