Waddell & Reed Trades Said to Help Spur May 6 Crash

A mutual fund’s routine effort to hedge against losses helped set off a chain of events that turned an orderly selloff on May 6 into a crash that erased $862 billion in U.S. equity value in less than 20 minutes, according to two people with direct knowledge of regulators’ findings.

Waddell & Reed Financial Inc. sold CME Group Inc.’s E-mini futures on the Standard & Poor’s 500 Index, spooking traders nervous because of the European debt crisis, the Securities and Exchange Commission and Commodity Futures Trading Commission have concluded, according to the people, who declined to be identified because the findings haven’t been released. Their report on the crash, which briefly sent the Dow Jones Industrial Average down 998.50 points, may be released as early as today.