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Rating:CFTC and SEC Will Blame Unnamed Waddell for Flash Crash Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, October 01, 2010

CFTC and SEC Will Blame Unnamed Waddell for Flash Crash

News summary by MFWire's editors

Almost five months after the Flash Crash, the Commodity Futures Trading Commission and the Securities and Exchange Commission are about to blame Waddell & Reed [see profile] for that sudden equity market drop ... without actually blaming Waddell. Two anonymous sources told Bloomberg's Nina Mehta and Jesse Westbrook that the two regulatory agencies are about to issue a report on the events of May 6, in which they will claim that one firm's sales of e-mini S&P 500 futures triggered the crash (as the European debt crisis had already made everybody jumpy). Yet Bloomberg claims that the report will stop short of actually naming Waddell.

An SEC spokesman declined to comment to the Bloomberg duo, while Waddell spokesman Roger Hoadley not that Waddell was simply "one of many traders that day ... merely trying to manage downside risk in our portfolios."

Mehta and Westbrook talked with several people about the soon-to-be-released report, including: USC finance professor Lawrence Harris and Scout Trading CEO Mike Bleich. They also cite Waddell chief investment officer Michael Avery's remarks on a recent conference call. With Mehta's and Westbrook's assistance, Bloomberg's Christopher Condon penned a separate article on the subject, citing mutual fund consultant Geoff Bobroff, Stifel Nicolaus analyst Jeffrey Hopson. The Market Financial blog also weighed in with a post on the subject, using an expletive to describe its author's dissatisfaction with the report's findings. 

Edited by: Neil Anderson, Managing Editor


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