Federal market regulators told a House Financial Services subcommittee on Tuesday they had yet to pinpoint the exact cause of the stock market's rapid decline on May 6, but added no evidence pointed to computer hacking.
Mary Schapiro, chairwoman of the Securities and Exchange Commission, said in testimony before the Financial Services Capital Markets, Insurance and Government-Sponsored Enterprises Subcommittee that SEC and the Commodity Futures Trading Commission were making "substantial progress" in attempting to nail down what caused the Dow Jones to slide by up to 9 percent in less than an hour before recovering to close with a loss of 3.2 percent.
Schapiro would not rule out the "fat finger" scenario, where a trader could have inadvertently entered in an order of billions of shares instead of millions, but said the investigation had yet to uncover anything relating to the possibility.
She also said there was no evidence of any unusual trading in Proctor and Gamble before the plunge, contrary to some reports, and she added there was no evidence of exchange computer hacking or acts of cyber-terrorism as the cause of the crash.
Schapiro and CFTC Chairman Gary Gensler both suggested that the crash could have been the confluence of many factors coming on what Schapiro said was already a "down day," with concerns over Greece's financial situation.
Noting that markets work on "both fear and greed," Gensler said he suspected "in those critical moments, fear took over."
Schapiro and Gensler also announced on Tuesday the formation of the Joint Advisory Committee on Emerging Regulatory Issues that they will co-chair. The committee's first issue will be looking into the stock market plunge at a meeting next week. Committee members include former SEC Chairman David Ruder, former CFTC Chairwoman Brooksley Bourne, and Robert Ketchum, chief executive officer of the Financial Industry Regulatory Authority.