My finance view

Regulators and Wall Street officials went through millions of trades one by one Friday and canceled thousands as they sought to explain a record plunge in the stock market, undo damage and keep it from happening again.

It wasn’t clear how long the laborious process would take or if it would even solve the mystery behind Thursday’s harrowing trading session that saw the Dow Jones industrial average fall hundreds of points and then recover, all in a matter of minutes. The chaotic slide — some stocks briefly fell to near zero — brought back memories of the darkest days of the financial crisis.

The Securities and Exchange Commission and Commodity Futures Trading Commission were investigating, but on the day after, there were more questions than answers:

— Did a single trader mistakenly punch the wrong number of shares when making a sell order, maybe mistyping "billion" instead of "million" and setting off a market-wide panic that at one point pulled the Dow down almost 1,000 points?

— Did high-speed computerized trading systems, supposed to make markets work smoothly, go haywire?

— Most important to anyone with money in the stock market: Could it happen again?

Maybe the scariest part was that no one could unravel what happened. That left executives at the major stock exchanges pointing fingers at one another, and the public wondering if the hidden world of high-frequency, computerized trading that fed the panic posed a threat to their 401(k)s.

"It could be awhile before they figure it out because they have to sift through everything trade by trade," said San Diego State University finance professor Dan Seiver, who has followed the markets for 52 years no fax pay day loan. "And humans are a lot slower than machines."

Market officials worked to cancel thousands of "clearly erroneous" trades made during the plunge.

New York Stock Exchange Euronext CEO Duncan Niederauer told CNBC that his exchange canceled 4,000 trades.

How did it happen? Speculation on trading floors initially centered on a computerized selloff possibly caused by a typographical error. One theory was that a trader trying to sell millions of shares accidentally sold billions, which would have triggered a wave of automatic selling.

The SEC is poring through trading data containing millions of transactions to try to identify what might have caused the disruption, according to two people familiar with the matter. The two major markets, the New York Stock Exchange and Nasdaq, were also examining audits of completed trades, according to the people, who spoke on condition of anonymity because the investigation is ongoing.

At Nasdaq, Thursday’s plunge set off MarketWatch, an internal system that alerts regulators to problems. Regulators are still sifting through the data for irregularities. A Nasdaq spokesman declined to comment.

NYSE spokesman Raymond Pellecchia said the Big Board is working with regulators but declined to comment further.

"Right now, there is no way to know what is happening in this marketplace," Kaufman said.

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