Computer Glitch is Rocking the Mutual Fund Industry; Emergency Meetings Called

The U.S. fund industry was in turmoil Wednesday as executives scrambled to respond to a computer glitch that prevented dozens of mutual and exchange-traded funds from promptly pricing their securities, reports WSJ.

The outage, which wasn’t believed to be related to the market turbulence Monday that included the largest-ever intraday decline in the Dow Jones Industrial Average, prompted emergency meetings Wednesday at banks, fund companies and financial intermediaries, as directors and executives sifted through pricing data and addressed likely legal ramifications of any mispricings.

According to WSJ, the problem, which began earlier in the week, has affected a number of large mutual fund firms, including Federated Investors, Prudential Financial Inc., Guggenheim Partners LLC and Voya Investment Management.

Emergency meetings were called with each mutual funds’ board of trustees, a group of independent directors that is involved in the pricing of fund shares.

Executives used back-up accounting systems for calculating the net asset values of their funds.

-RW