I love The Star and admire the quality of most of the work, but sometimes it falls face down in the mud.
Such was the case Saturday with paper’s treatment of the pivotal role that Waddell & Reed might have played in the recent 998-point plunge in the Dow Jones Industrial Average.
The story was buried on A-14 under a two-column headline titled “Waddell’s drop-off linked to reports” — a headline that, in itself, makes little sense. Compare that to The New York Times’ handling of the same story.
In The Times, the story led the business section, under a strong and unequivocal headline that read, “Kansas Mutual Fund Identified as Trader in Market Plunge.”
That headline tells the reader, in no uncertain terms, “This is a big deal.” The Times’ story fingered Waddell & Reed, a 70-year-old mutual fund company based in Overland Park, as the main culprit in the Dow Jones plunge on May 6.
In the space of 19 minutes that day, Waddell & Reed sold 75,000 “e-mini futures contracts” — contracts that are tied to the value of the S&P 500 index. Those sales triggered many additional sales, clogging trading channels “like water draining into a narrower and narrower funnel,” as The Times’ story aptly put it.
The Star’s story, by contrast, lacked detail and sharp focus.
Both stories quoted or paraphrased Waddell & Reed’s attempt to dismiss the significance of the 75,000 contract sales by saying it was all “part of the normal operation of our flexible portfolio funds.” Unlike The Times, however, The Star did not offer important contextual information: Earlier in the week, the chairman of the commodity Futures Trading Commission had said at a Congressional hearing that during the crucial time period on May 6, a single futures trader accounted for about nine percent of trading volume in the e-mini futures market.
On Friday, that trader was identified, and it was Waddell & Reed. That prompted alerts to sound at The Times’ offices in New York City. At 18th and Grand, however, the disclosure apparently generated little more than a yawn, judging by the ensuing story.
By any measure, the news should have resulted in a front-page story in Saturday’s Star. But nope, it was watered down and buried, and The Star’s Business Desk didn’t muster enough initiative for the story to warrant a local by-line. The story was credited, instead, to “staff and wire reports.”
I’ve written before how The Star has some “sacred cows,” such as The Plaza and the Nelson-Atkins Museum of Art, which the editors are reluctant to cast in a negative light. From the looks of the story at hand, one might think that Waddell & Reed is in the same category. But that’s not the case. Waddell & Reed gets no passes; it is fair game and has taken its share of pummeling in the newspaper.
No, this looks like a case of simple editorial laziness. Who’s to blame? Well, you can start with Business Editor Keith Chrostowski (unless he was out of the office on Friday), and then you go up the line to Managing Editor Steve Shirk and Editor Mike Fannin, assuming they were working Friday. The way the newsroom handled the story, it might not have been called to the attention of Publisher Mark Zieman, but he looks bad, too — whether or not he was on duty — because, well, he’s the ultimate authority.
All in all, it was a lame, embarrassing effort.