NEW YORK (CNNMoney.com) -- Investment firm Waddell & Reed responded Friday to a media report that it placed a large sell order for certain stock futures that regulators believe may have contributed to last week's brief-but-historic stock market crash.
In what has come to be known as the flash crash, the Dow Jones industrial average plunged 1,000 points -- the biggest intra-day trading drop ever -- on May 6, briefly erasing $1 trillion in market value, before regaining much of the lost ground.
While the ultimate cause of the collapse remains unknown, regulators have focused their investigation on a sharp drop in the value of a stock future called the E-mini S&P 500, which investors use to bet on the future performance of stocks in the broad stock index.
Waddell, an asset management and financial planning company based in Overland Park, Kan., sold a large order of E-mini futures contracts during a 20-minute span that corresponded with the plunge, according to a document obtained by Reuters.
In a statement, Waddell said it was one of possibly 250 other investors trading the E-mini futures contract on the day in question.
"On May 6, as on many trading days, Waddell & Reed executed several trading strategies, including index futures contracts, as part of the normal operation of our flexible portfolio funds," the firm said in a statement.
Waddell added that such trades are used to protect investors from potential losses, adding that the firm is a "'bona fide hedger' and not someone intending to disrupt the markets."
"This is a longstanding and well-monitored practice in certain of our investment portfolios," said Waddell.
Waddell (WAD) shares fell 5% to $32.38 Friday.
Gary Gensler, chairman of the Commodity Futures Trading Commission, said in congressional testimony Tuesday that regulators were focusing on one particular trader in the market for E-mini futures as part of the commission's investigation into the flash crash.
Gensler said the trader in question entered the market at around 2:32 p.m. ET on May 6 and finished trading by around 2:51 p.m. ET. He said this trader and others had executed hedging strategies of similar size previously.
A spokesman for the CFTC said the agency has no comment on the report. 
| Overnight Avg Rate | Latest | Change | Last Week |
|---|---|---|---|
| 30 yr fixed | 3.80% | 3.80% | |
| 15 yr fixed | 3.09% | 3.11% | |
| 5/1 ARM | 2.65% | 2.69% | |
| 30 yr refi | 3.77% | 3.86% | |
| 15 yr refi | 3.09% | 3.21% |
Today's featured rates:
| Index | Last | Change | % Change |
|---|---|---|---|
| Dow | 12,454.83 | -74.92 | -0.60% |
| Nasdaq | 2,837.53 | -1.85 | -0.07% |
| S&P 500 | 1,317.82 | -2.86 | -0.22% |
| Treasuries | 1.74 | -0.01 | -0.80% |
| Company | Price | Change | % Change |
|---|---|---|---|
| Bank of America Corp... | 7.15 | 0.01 | 0.14% |
| Sprint Nextel Corp | 2.62 | 0.09 | 3.56% |
| Cisco Systems Inc | 16.33 | -0.06 | -0.37% |
| Chesapeake Energy Co... | 15.81 | 0.23 | 1.48% |
| Ford Motor Co | 10.60 | 0.01 | 0.09% |
|
The Senate hearing will focus JPMorgan's recent $2 billion trading loss, which Dimon announced earlier this month. More |
The offer for mail handlers is part of the Postal Service's plan to cut 150,000 jobs by 2015. More |
In the whirlwind of its IPO fallout, there has been a sort of glee in watching the company stumble. What's driving the Facebook-schadenfreude and what can the social network do about it? More |
One in six children in the United States is obese. These small businesses have found creative -- and lucrative -- ways to fight the childhood obesity epidemic. More |
In Harper County, Kansas, oil companies are offering farmers up to $1,250 an acre for the mineral rights that allow them to drill for oil on their property. More |
.
