Waddell & Reed: Don't blame us for market tailspin

Waddell & Reed Financial Inc., the mutual-fund manager started in 1937, said it didn't intend to disrupt markets on May 6 when the plunge in stocks temporarily erased more than $1 trillion of value.
MAY 14, 2010
Waddell & Reed Financial Inc., the mutual-fund manager started in 1937, said it didn't intend to disrupt markets on May 6 when the plunge in stocks temporarily erased more than $1 trillion of value. Waddell & Reed traded index futures contracts as “part of the normal operation” of its funds, according to a statement today from the Overland Park, Kansas-based firm. The firm said it believes it was among more than 250 firms that traded “e- mini” contracts during the time the market sold off. The U.S. stock market, fueled by computer-driven trading, last week had its biggest intraday decline since the crash of October 1987. During the market drop, Waddell & Reed sold 75,000 e-mini contracts, which are tied the Standard & Poor's 500 Index, Reuters reported today. Gary Gensler, chairman of the Commodity Futures Trading Commission, had said previously that one sale was responsible for about 9 percent of the day's volume in e-minis. Comments by the CFTC and other regulators “indicate that we are a ‘bona fide hedger' and not someone intending to disrupt the markets,” according to Waddell & Reed's statement. “Like many market participants, Waddell & Reed was affected negatively by the market activity of May 6.” Waddell & Reed fell $1.93, or 5.7 percent, to $32.13 as of 2:25 p.m. in New York Stock Exchange composite trading.

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