Citigroup: One Errant Trade May Have Triggered Near 1,000-Pt. Collapse

What caused the sell-off?

Well, consider this highly speculative, but here goes: One proprietary trader at a major bank tells my colleague Steven Sears that “basket trading” at Citigroup (C), meaning, the trading of groups of stocks that investors structure on their own to resemble indices, caused the decline.

Speculation is that a trader wanted to sell $1 million notional of stocks and instead entered $1 billion notional — a typo, in effect — and that that triggered a sell-off in some stocks and some stocks traded to zero, such as Accenture (ACN).

Steven has calls in to Citi but has received no comment yet.

A fund manager at a major money management house relates in an email this afternoon that “Procter & Gamble (PG) and Accenture stocks had the huge hit. Have heard massive program error by Citi. One of those trades where there were likely three extra zeros added.”