Imagine you’re an individual investor with shares in Diebold, the maker of ATMs and security systems. You’ve just sat down at the company’s annual shareholders meeting on June 2. Back stage, just minutes before taking the podium, CEO Thomas Swidarski learned the company’s share price has dropped 30 percent—in six seconds! You turn off your Blackberry so you’re no longer connected to the outside world.
Moments later, Diebold’s share price rockets back up and closes at $29.08, 3 percent above its opening. Trading volume, however, was 11 times its daily average. A review by the exchanges for misconduct or errors allows the day’s trading activity to stand. Bloomberg BusinessWeek later reports that the plunge may have occurred “when a shred of Diebold news bounced into the growing network of computer programs that search out financial information, analyze it, and trade instantly without human intervention” (emphasis added).
