Washington Post Surge Triggers New SEC Trading Curbs (Update2)
By Nick Baker
June 16 (Bloomberg) -- Three erroneous orders in Washington Post Co. shares briefly caused the stock to double, making it the first U.S. company to be halted by circuit breakers imposed following the May 6 crash that erased $862 billion from equities in 20 minutes.
The trades totaling 766 shares at $919.18 or $929.18 crossed on NYSE Euronext’s NYSE Arca electronic platform at 3:07:30 p.m. New York time, according to data compiled by Bloomberg. That compared with a price of $462.84 before the jump. The transactions were later canceled, the data show.
The Securities and Exchange Commission trading curbs started going into effect on June 11. The program, which is being tested through December, pauses trading in Standard & Poor’s 500 Index stocks for five minutes when they rise or fall 10 percent in five minutes or less. Washington Post jumped 103 percent to $929.18 before the halt, then traded at $457.69 as of 3:46 p.m. in New York after the trading ban stopped.
“It did do what it was supposed to do,” said Jason Weisberg, director of institutional trading at Seaport Securities in New York. “That’s a very interesting stock. It’s very expensive, so stocks priced like that are much more susceptible. It’s very easy to make a mistake.”
Rima Calderon, a spokeswoman for Washington Post, declined to comment. “It appears to have been triggered by an erroneous trade,” NYSE spokesman Ray Pellecchia said.
Limited Curbs
The Dow Jones Industrial Average plunged almost 1,000 points on May 6. A May 18 report from the SEC and Commodity Futures Trading Commission gave six potential causes of the crash, including trading curbs that applied only at the New York Stock Exchange.
Halts “will help reduce the likelihood of this type of unusual trading activity from recurring,” SEC Chairman Mary Schapiro said on June 2.
Because Washington Post shares were able to jump so much today, the trading curbs don’t appear to work, said Jeff Rubin, an analyst at Westport, Connecticut-based Birinyi Associates Inc., the research and investment firm founded by Laszlo Birinyi.
“The rules that they have in place are not going to stop moves from these clearly erroneous trades from happening,” he said. “The rule is ineffective.”
To contact the reporter on this story: Nick Baker in New York at nbaker7@bloomberg.net.
Last Updated: June 16, 2010 15:49 EDT |
