Which company’s trading error was linked to the 2010 Flash Crash?

Waddell & Reed’s trading activity was linked to the 2010 Flash Crash.

On May 6, 2010, U.S. stock markets experienced an extraordinarily rapid decline and partial recovery. The Dow Jones Industrial Average fell about 1,000 points, nearly 9 percent, within minutes before recovering much of the loss. The episode affected stocks, futures, options, and exchange-traded funds.

A joint investigation by U.S. regulators concluded that a large automated sell order in E-mini S&P 500 futures, executed for Waddell & Reed, helped trigger the extreme volatility. The report also emphasized the interaction of that order with high-frequency traders, liquidity conditions, and automated responses across markets.

The Flash Crash is often confused with the 2012 Knight Capital trading incident, which involved a software deployment error and caused a major loss for that firm. Knight Capital was not the company associated with the original 2010 event. Afterward, exchanges and regulators strengthened safeguards such as circuit breakers and single-stock volatility controls.