Mutual Fund’s Huge Sales on Oct. 19 Under Probe

Fidelity Investments of Boston, one of the nation’s largest mutual fund operators, sold off $850 million in stock on Oct. 19, accounting for 4.5% of the New York Stock Exchange’s $20.4 billion in sales on Black Monday, the Boston Globe reported Tuesday.

Fidelity, which started selling in London before the opening of U.S. markets, had half a billion dollars of sell orders for the New York Stock Exchange when it opened, the Globe said.

The Dow Jones industrial index fell more than 200 points in the first hour of Black Monday, the nation’s worst one-day stock market plummet when corporate America lost about $500 billion. The Dow index fell 508 points--or 22.6%--during that day.

Sources told the newspaper that Fidelity, with about $500 million in sell orders, was among a few major financial institutions whose heavy sales helped prompt the market’s devastating plummet. Fidelity vigorously denies the claim, the Globe said.

Fidelity’s trading records are being examined by a presidential task force on the crash, the newspaper said.

Fidelity Vice President Rab Bertelsen confirmed the large volume of sell orders but said the company tried to minimize damage to the market by adhering to “an orderly selling plan organized on Sunday, Oct. 18, before the tumult of the 19th,” the Globe reported. In the morning, when the market was swamped with sellers and suffered about half its loss for the day, Fidelity accounted for about 6% of selling, the newspaper said.

Other heavy sellers included: San Francisco-based Wells Fargo, Bankers Trust New York and Aetna Life Insurance Co. of Hartford, Conn., sources told the Globe.

Fidelity had $88 billion in assets before the crash and nearly $75 billion afterward.