Earlier this year, the stock market fell dramatically—the Dow lost 600 points in minutes— in the afternoon of May 6. The markets were already jittery, thanks to Greece's debt issues plaguing Europe, and the Dow fell 1,000 points. The NY Times reports that the SEC has found the "flash crash" was caused not by "any market manipulation but by a single firm trying to hedge its investment position, if in an aggressive and abrupt manner." Way to go, algorithms!

It said that at about 2:32 p.m., a mutual fund — which was not identified in the report, but which officials have identified as Waddell & Reed Financial of Kansas — started a program to sell 75,000 E-Mini Standard &Poor’s 500 futures contracts, using computer sell algorithms. Normally, a sale of this size would take place over as many as five hours, but the large sale was executed in 20 minutes, the regulators said.

The algorithm was programmed to execute the trade “without regard to price or time,” the report said.

The selling pressure was then transferred from the futures markets to the stock market, leading to the abrupt drop in individual stocks.

Stock and stock-index futures prices were already declining on May 6 when, about 2:42 p.m., they suddenly plunged by more than 5 percent over the next five minutes.

When prices bottomed at about 2:47 p.m., the Dow Jones industrial average was down nearly 990 points, 9.1 percent below where it had started the day. Almost as quickly as prices dropped, however, they rebounded, with the Dow industrials recovering 543 points in about 90 seconds. The Dow finished the day down 347.80, or 3.2 percent, at 10,520.32.

The Wall Street Journal has an interactive graphic about the flash crash.