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The 5 Dumbest Things on Wall Street This Week: Aug. 23

1. Goldman's Glitch

Was it a technical glitch? Was it a fat finger? Somebody please tell us exactly why Goldman Sachs (GS - Get Report) sent waves of erroneous option orders into the market Tuesday morning?

Dumbest minds want to know!

Lord knows we expect this type of thing to happen at the Nasdaq (NDAQ) like we saw on Thursday when trading was shut down for more than three hours. But we're talking about almighty, glorious Goldman here, not some silly little exchange that couldn't even handle Facebook's (FB) IPO.

In what seemed like a reprise of the so-called "flash crash" of 2010, Goldman placed a slew of unauthorized option orders on stocks and ETFs with ticker symbols beginning with the letters I through K, driving some prices off a cliff as a result. U.S. options exchanges told traders on Tuesday that the trades would be reviewed and could be cancelled in some cases.

"The exchanges are working to resolve the issue," said a Goldman spokesman in a statement. "Neither the risk nor the potential loss is material to the financial condition of the firm."

Chill out, dude. We know you think the financial world revolves around Goldman Sachs, but nobody's worried about your firm getting washed away by a "technology breakdown" like Knight Capital did last summer. We're worried about the system. We all know Goldman Sachs traders and cockroaches will be the last ones standing when Armageddon hits. And we also know that when those busted trades go to arbitration Goldman will miraculously come out on top. As we said previously, we both live and breathe.

Knight's glitch, for those that may not remember, sent the firm to a $440 million loss and into the arms of Getco. Goldman could handle a loss like that without missing a beat and if it needed any more cash then it could always count on Uncle Sam or Uncle Warren to bail it out.

Heck, Goldman settled with the SEC for $550 million three years ago and barely blinked. For that matter, it barely admitted wrongdoing, but that's a different point entirely.

All that said, we still want to know what happened, because if machines are running amok at Goldman then it's a problem for every other trader out there. We need to make sure this doesn't happen again at Goldman or one of the other "Too Big to Fail" banks.

Even the highfalutin folks at Goldman would have to admit that much. Lord knows they don't have the "Fabulous" Fab Tourre to take the fall for them anymore.

-- Written by Gregg Greenberg in New York

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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