Recent Market Volatility Leaves Investors In A Panic
Last week’s market volatility - in which the stock market registered its largest intraday point drop in history - has left investors reeling and fearing a repeat performance in the not-so-distant near future.
Most of all, investors want to know what contributed to the 1,000-plummet in the Dow Jones Industrial Average on May 6. Was human error to blame? A computer glitch using pre-programmed mathematical models? Fears about the Greek debt crisis? There’s also rumors of a large hedge fund liquidating shares as a possible contributor. So far, no one theory has been proven.
In a May 7 article by the Wall Street Journal, Steven Caruso, a partner with Maddox, Hargett & Caruso P.C., reports that he received a telephone call from a couple who had sold stock via an order to do so at the market price during the decline of May 6. The husband and wife received $100,000 less than they expected, according to the article.
“The message was, “We got killed. Can you help?’” Caruso said. “The woman said her husband sold some securities and got taken out of the position at a very low price before things came back.”
Many investors are in the same boat. Regulators and the exchanges are reportedly reviewing millions of trades made during the computerized sell-off. Under procedures announced by major U.S. stock exchanges, trades made on May 6 will be canceled if they occurred between 2:40 p.m. and 3 p.m. at prices 60% above or below the level that prevailed at 2:40 p.m., before the market’s downward spiral took hold.
Our affiliation of securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.
