The Doctor Will See You Now. Please Log On
By MILT FREUDENHEIM
Copyright by The New York Times
Published: May 28, 2010
http://www.nytimes.com/2010/05/30/business/30telemed.html?th&emc=th
ONE day last summer, Charlie Martin felt a sharp pain in his lower back. But he couldn’t jump into his car and rush to the doctor’s office or the emergency room: Mr. Martin, a crane operator, was working on an oil rig in the South China Sea off Malaysia.
He could, though, get in touch with a doctor thousands of miles away, via two-way video. Using an electronic stethoscope that a paramedic on the rig held in place, Dr. Oscar W. Boultinghouse, an emergency medicine physician in Houston, listened to Mr. Martin’s heart.
“The extreme pain strongly suggested a kidney stone,” Dr. Boultinghouse said later. A urinalysis on the rig confirmed the diagnosis, and Mr. Martin flew to his home in Mississippi for treatment.
Mr. Martin, 32, is now back at work on the same rig, the Courageous, leased by Shell Oil. He says he is grateful he could discuss his pain by video with the doctor. “It’s a lot better than trying to describe it on a phone,” Mr. Martin says.
Dr. Boultinghouse and two colleagues — Michael J. Davis and Glenn G. Hammack— run NuPhysicia, a start-up company they spun out from the University of Texas in 2007 that specializes in face-to-face telemedicine, connecting doctors and patients by two-way video.
Spurred by health care trends and technological advances, telemedicine is growing into a mainstream industry. A fifth of Americans live in places where primary care physicians are scarce, according to government statistics. That need is converging with advances that include lower costs for video-conferencing equipment, more high-speed communications links by satellite, and greater ability to work securely and dependably over the Internet.
“The technology has improved to the point where the experience of both the doctor and patient are close to the same as in-person visits, and in some cases better,” says Dr. Kaveh Safavi, head of global health care for Cisco Systems, which is supporting trials of its own high-definition video version of telemedicine in California, Colorado and New Mexico.
The interactive telemedicine business has been growing by almost 10 percent annually, to more than $500 million in revenue in North America this year, according to Datamonitor, the market research firm. It is part of the $3.9 billion telemedicine category that includes monitoring devices in homes and hundreds of health care applications for smartphones.
Christine Chang, a health care technology analyst at Datamonitor’s Ovum unit, says telemedicine will allow doctors to take better care of larger numbers of patients. “Some patients will be seen by teleconferencing, some will send questions by e-mail, others will be monitored” using digitized data on symptoms or indicators like glucose levels, she says.
Eventually, she predicts, “one patient a day might come into a doctor’s office, in person.”
Although telemedicine has been around for years, it is gaining traction as never before. Medicare, Medicaid and other government health programs have been reimbursing doctors and hospitals that provide care remotely to rural and underserved areas. Now a growing number of big insurance companies, like the UnitedHealth Group and several Blue Cross plans, are starting to market interactive video to large employers. The new federal health care law provides $1 billion a year to study telemedicine and other innovations.
With the expansion of reimbursement, Americans are on the brink of “a gold rush of new investment in telemedicine,” says Dr. Bernard A. Harris Jr., managing partner at Vesalius Ventures, a venture capital firm based in Houston. He has worked on telemedicine projects since he helped build medical systems for NASA during his days as an astronaut in the 1990s.
Face-to-face telemedicine technology can be as elaborate as a high-definition video system, like Cisco’s, that can cost up to hundreds of thousands of dollars. Or it can be as simple as the Webcams available on many laptops.
NuPhysicia uses equipment in the middle of that range — standard videoconferencing hookups made by Polycom, a video conferencing company based in Pleasanton, Calif. Analysts say the setup may cost $30,000 to $45,000 at the patient’s end — with a suitcase or cart containing scopes and other special equipment — plus a setup for the doctor that costs far less.
Telemedicine has its skeptics. State regulators at the Texas Medical Board have raised concerns that doctors might miss an opportunity to pick up subtle medical indicators when they cannot touch a patient. And while it does not oppose telemedicine, the American Academy of Family Physicians says patients should keep in contact with a primary physician who can keep tabs on their health needs, whether in the virtual or the real world.
“Telemedicine can improve access to care in remote sites and rural areas,” says Dr. Lori J. Heim, the academy’s president. “But not all visits will take place between a patient and their primary-care doctor.”
Dr. Boultinghouse dismisses such concerns. “In today’s world, the physical exam plays less and less of a role,” he says. “We live in the age of imaging.”
ON the rig Courageous, Mr. Martin is part of a crew of 100. Travis G. Fitts Jr., vice president for human resources, health, safety and environment at Scorpion Offshore, which owns the rig, says that examining a worker via two-way video can be far cheaper in a remote location than flying him to a hospital by helicopter at $10,000 a trip.
Some rigs have saved $500,000 or more a year, according to NuPhysicia, which has contracts with 19 oil rigs around the world, including one off Iraq. Dr. Boultinghouse says the Deepwater Horizon drilling disaster in the Gulf of Mexico may slow or block new drilling in United States waters, driving the rigs to more remote locations and adding to demand for telemedicine.
NuPhysicia also offers video medical services to land-based employers with 500 or more workers at a site. The camera connection is an alternative to an employer’s on-site clinics, typically staffed by a nurse or a physician assistant.
Mustang Cat, a Houston-based distributor that sells and services Caterpillar tractors and other earth-moving equipment, signed on with NuPhysicia last year. “We’ve seen the benefit, ” says Kurt Hanson, general counsel at Mustang, a family-owned company. Instead of taking a half-day or more off to consult a doctor, workers can get medical advice on the company’s premises.
NuPhysicia’s business grew out of work that its founders did for the state of Texas. Mr. Hammack, NuPhysicia’s president, is a former assistant vice president of the University of Texas Medical Branch at Galveston, where he led development of the state’s pioneering telemedicine program in state prisons from the mid-1990s to 2007. Dr. Davis is a cardiologist.
Working with Dr. Boultinghouse, Dr. Davis and other university doctors conducted more than 600,000 video visits with inmates. Significant improvement was seen in inmates’ health, including measures of blood pressure and cholesterol, according to a 2004 report on the system in the Journal of the American Medical Association.
In March, California officials released a report they had ordered from NuPhysicia with a plan for making over their state’s prison health care. The makeover would build on the Texas example by expanding existing telemedicine and electronic medical record systems and putting the University of California in charge.
California spends more than $40 a day per inmate for health care, including expenses for guards who accompany them on visits to outside doctors. NuPhysicia says that this cost is more than four times the rate in Texas and Georgia, and almost triple that of New Jersey, where telemedicine is used for mental health care and some medical specialties.
“Telemedicine makes total sense in prisons,” says Christopher Kosseff, a senior vice president and head of correctional health care at the University of Medicine and Dentistry of New Jersey. “It’s a wonderful way of providing ready access to specialty health care while maintaining public safety.”
Georgia state prisons save an average of $500 in transportation costs and officers’ pay each time a prisoner can be treated by telemedicine, says Dr. Edward Bailey, medical director of Georgia correctional health care.
With data supplied by the California Department of Corrections and Rehabilitation, which commissioned the report, NuPhysicia says the recommendations could save the state $1.2 billion a year in prisoners’ health care costs.
Gov. Arnold Schwarzenegger wants the university regents and the State Legislature to approve the prison health makeover. After lawsuits on behalf of inmates, federal courts appointed a receiver in 2006 to run prison medical services. (The state now runs dental and mental health services, with court monitoring.) Officials hope that by putting university doctors in charge of prison health, they can persuade the courts to return control to the state.
“We’re going to use the best technology in the world to solve one of our worst problems — the key is telemedicine,” the governor said.
WITHOUT the blessing of insurers, telemedicine could never gain traction in the broader population. But many of the nation’s biggest insurers are showing growing interest in reimbursing doctors for face-to-face video consulting.
Starting in June, the UnitedHealth Group plans to reimburse doctors at Centura Health, a Colorado hospital system, for using Cisco advanced video to serve UnitedHealth’s members at several clinics. And the insurer plans a national rollout of telemedicine programs, including video-equipped booths in retail clinics in pharmacies and big-box stores, as well as in clinics at large companies.
“The tide is turning on reimbursement,” says Dr. James Woodburn, vice president and medical director for telehealth at UnitedHealth.
Both UnitedHealth and WellPoint, which owns 14 Blue Cross plans, are trying lower-cost Internet Webcam technology, available on many off-the-shelf laptops, as well as advanced video.
UnitedHealth and Blue Cross plans in Hawaii, Minnesota and western New York are using a Webcam service provided by American Well, a company based in Boston. And large self-insured employers like Delta Air Lines and Medtronic, a Blue Cross Blue Shield customer in Minneapolis, are beginning to sign up.
Delta will offer Webcam consultations with UnitedHealth’s doctor network to more than 10,000 Minnesota plan members on July 1, says Lynn Zonakis, Delta’s managing director of health strategy and resources. Within 18 months, Webcam access will be offered nationally to more than 100,000 Delta plan members.
Dr. Roy Schoenberg, C.E.O. of American Well, says his Webcam service is “in a completely different domain” than Cisco’s or Polycom’s. “Over the last two years, we are beginning to see a side branch of telemedicine that some call online care,” he says. “It connects doctors with patients at home or in their workplace.”
Doctors “are not going to pay hundreds of thousands of dollars for equipment, so we have to rely on lower tech,” he adds. The medical records are stored on secure Web servers behind multiple firewalls, and the servers are audited twice a year by I.B.M. and other outside computer security companies, Dr. Schoenberg says.
In Hawaii, more than 2,000 Blue Cross plan members used Webcams to consult doctors last year, says Laura Lott, a spokeswoman for the Hawaii Medical Service Association. Minnesota Blue Cross and Blue Shield started a similar Webcam service across the state last November.
Doctors who use the higher-tech video conferencing technology say that Webcam images are less clear, and that Webcams cannot accommodate electronic scopes or provide the zoom-in features available in video conferencing. “If they are not using commercial-grade video conferencing gear, the quality will be much lower,” says Vanessa L. McLaughlin, a telemedicine consultant in Vancouver, Wash.
Last month, Charlie Martin, the crane operator, was back in the infirmary of the Courageous for an eye checkup. In Houston, his face filled the big screen in NuPhysicia’s office.
After an exchange of greetings, Chris Derrick, the paramedic on the oil rig, attached an ophthalmological scanner to a scope, pointed it at Mr. Martin’s eye, and zoomed in.
“Freeze that,” Dr. Boultinghouse ordered, as a close-up of the eye loomed on the screen. “His eyes have been bothering him. It may be from the wind up there on the crane.”
Sunday, May 30, 2010
Foes and Supporters of New Immigration Law Gather in Arizona
Foes and Supporters of New Immigration Law Gather in Arizona
By RANDAL C. ARCHIBOLD
Copyright by The New York Times
Published: May 29, 2010
http://www.nytimes.com/2010/05/30/us/30immig.html?th&emc=th
PHOENIX — Two sides of the immigration debate converged here Saturday: a throng of several thousand marching for five miles opposed to Arizona’s new immigration law, and several thousand nearly filling a nearby stadium in the evening in support of it.
Gov. Jan Brewer of Arizona, top, pulled Attorney General Terry Goddard, above, from defending an immigration law, calling his Friday meeting with a federal team a “curious coordination.”
Organizers said the timing was coincidental, with both sides taking advantage of a holiday weekend to bring out the masses. But the gatherings encapsulated in a single day the passions surrounding the national immigration debate, recharged by the new law, which will expand the state’s role in immigration enforcement.
Both demonstrations made a point of waving a large number of American flags and issuing pleas for a national overhaul of immigration law, but they offered a jarring study in how polarized the debate has become here.
The demonstrators against the law were mostly Latino, with young people and families making up a large share. They played drums, whistled and chanted and gave speeches in Spanish and English denouncing the perceived racism behind the law. Many carried posters or wore T-shirts with the message: “Do I look illegal?”
At the rally in favor of the law, which began with the pledge of allegiance and the national anthem, any mention of Mexico or supporters of the law brought lusty boos — a video clip of President Felipe Calderón of Mexico especially fired up the crowd, which was mostly white and middle-aged or older. Placards like “Illegals out of the U.S.A.” were typical, though speaker after speaker ridiculed the idea that the crowd was racist.
Far more attended the earlier rally opposed to the law, which included a five-mile march to the Capitol in withering heat. It was one of the largest since Gov. Jan Brewer signed the law April 23.
Some were citizens, like Armando Diaz, 33, a mechanic born and raised here who believes the law has helped spread anti-Latino fervor in the state.
“This is not what Arizona is about, hate,” Mr. Diaz said as he neared the capitol, where people fled for what little shade they could find. “But that is what this law is about.”
The later rally, at sundown, was organized by Tea Party groups from St. Louis and Dallas who said they decided to take the lead and support the state against a wave of boycotts protesting the law, some by cities like San Francisco and Seattle.
“We are doing this to crush any boycott against the free market,” said Tina Loudon, a Tea Party member from St. Louis who helped organize the rally. “Arizona has a sovereign right to enforce immigration laws on the books.”
The law — barring any successful legal challenges — will take effect July 29. It would allow the police to check the immigration status of people they suspect are illegal immigrants when they have been stopped for another reason. It also makes it a state crime, not just a federal one, to not carry immigration papers.
Advocates see it as a tool for law enforcement to weed out illegal immigrants, while five lawsuits filed against it call it an infringement on federal authority and suggest that Latino citizens and legal residents will be swept up for questioning.
On another front, the governor and attorney general are disputing who will defend the state against the legal challenges and possible litigation by the United States Justice Department.
Ms. Brewer, a Republican, said Friday she had removed the state’s attorney general, a Democrat and vocal opponent of the law, from defending it, accusing him of colluding with the Justice Department as it nears a decision on whether to challenge the law in court.
But the matter remained in dispute on Saturday, as the attorney general, Terry Goddard, a Democrat and potential challenger in her re-election bid, said in an e-mail message that he was “definitely defending the state” in legal challenges to the law.
Ms. Brewer said she took action after Mr. Goddard met Friday with Justice Department lawyers, who then met with her legal advisers.
Justice Department officials said they routinely meet with a state’s attorney general and governor when considering legal action against their state.
“We continue to have concerns that the law drives a wedge between law enforcement and the communities they serve, and are examining it to see what options are available to the federal government,” said Tracy Schmaler, a department spokeswoman.
The United States attorney general, Eric H. Holder Jr., has said he worries that the law may intrude on federal authority and lead to racial profiling.
Protest rallies were also held Saturday at the state capitols in Texas and Oregon, as well as in San Francisco, according to The Associated Press.
At the Arizona demonstrations, opinions could not be further apart.
Mireya Chavez Cerna, 43, an illegal immigrant who works as a maid, marched with her 9-year-old son, who was born in the United States and wore a shirt reading “Made in America.”
She denounced the climate of fear in the state and said immigrants like her could not abide the wait of a decade or more for a legal visa while their families grow hungry.
“Do you think we would risk losing our lives crossing the border if we didn’t have a need to come here for a better life?” she said. Supporters of the law “don’t know,” she added. “They don’t understand. They don’t live in Mexico. They don’t know how it is.”
But Ann Hyde, a radiological technologist from Chandler, said she grew frustrated at supporters being tarred as prejudiced or worse.
“We are not racists,” she said. “This law is about respecting the laws of the nation and the economic impact of illegal immigration, which is enormous. My state is broke and they cost us with spending on schools, hospitals and other services.”
Though violent crime is declining in Arizona, as in most other states, and illegal immigration is down at the border, speakers played up crimes that illegal immigrants have been charged with over the years, including shooting of police officers.
“One is too many,” said Mark Spencer, the chairman of a union representing rank-and-file police officers in Phoenix.
Ana Facio Contreras contributed from Phoenix.
By RANDAL C. ARCHIBOLD
Copyright by The New York Times
Published: May 29, 2010
http://www.nytimes.com/2010/05/30/us/30immig.html?th&emc=th
PHOENIX — Two sides of the immigration debate converged here Saturday: a throng of several thousand marching for five miles opposed to Arizona’s new immigration law, and several thousand nearly filling a nearby stadium in the evening in support of it.
Gov. Jan Brewer of Arizona, top, pulled Attorney General Terry Goddard, above, from defending an immigration law, calling his Friday meeting with a federal team a “curious coordination.”
Organizers said the timing was coincidental, with both sides taking advantage of a holiday weekend to bring out the masses. But the gatherings encapsulated in a single day the passions surrounding the national immigration debate, recharged by the new law, which will expand the state’s role in immigration enforcement.
Both demonstrations made a point of waving a large number of American flags and issuing pleas for a national overhaul of immigration law, but they offered a jarring study in how polarized the debate has become here.
The demonstrators against the law were mostly Latino, with young people and families making up a large share. They played drums, whistled and chanted and gave speeches in Spanish and English denouncing the perceived racism behind the law. Many carried posters or wore T-shirts with the message: “Do I look illegal?”
At the rally in favor of the law, which began with the pledge of allegiance and the national anthem, any mention of Mexico or supporters of the law brought lusty boos — a video clip of President Felipe Calderón of Mexico especially fired up the crowd, which was mostly white and middle-aged or older. Placards like “Illegals out of the U.S.A.” were typical, though speaker after speaker ridiculed the idea that the crowd was racist.
Far more attended the earlier rally opposed to the law, which included a five-mile march to the Capitol in withering heat. It was one of the largest since Gov. Jan Brewer signed the law April 23.
Some were citizens, like Armando Diaz, 33, a mechanic born and raised here who believes the law has helped spread anti-Latino fervor in the state.
“This is not what Arizona is about, hate,” Mr. Diaz said as he neared the capitol, where people fled for what little shade they could find. “But that is what this law is about.”
The later rally, at sundown, was organized by Tea Party groups from St. Louis and Dallas who said they decided to take the lead and support the state against a wave of boycotts protesting the law, some by cities like San Francisco and Seattle.
“We are doing this to crush any boycott against the free market,” said Tina Loudon, a Tea Party member from St. Louis who helped organize the rally. “Arizona has a sovereign right to enforce immigration laws on the books.”
The law — barring any successful legal challenges — will take effect July 29. It would allow the police to check the immigration status of people they suspect are illegal immigrants when they have been stopped for another reason. It also makes it a state crime, not just a federal one, to not carry immigration papers.
Advocates see it as a tool for law enforcement to weed out illegal immigrants, while five lawsuits filed against it call it an infringement on federal authority and suggest that Latino citizens and legal residents will be swept up for questioning.
On another front, the governor and attorney general are disputing who will defend the state against the legal challenges and possible litigation by the United States Justice Department.
Ms. Brewer, a Republican, said Friday she had removed the state’s attorney general, a Democrat and vocal opponent of the law, from defending it, accusing him of colluding with the Justice Department as it nears a decision on whether to challenge the law in court.
But the matter remained in dispute on Saturday, as the attorney general, Terry Goddard, a Democrat and potential challenger in her re-election bid, said in an e-mail message that he was “definitely defending the state” in legal challenges to the law.
Ms. Brewer said she took action after Mr. Goddard met Friday with Justice Department lawyers, who then met with her legal advisers.
Justice Department officials said they routinely meet with a state’s attorney general and governor when considering legal action against their state.
“We continue to have concerns that the law drives a wedge between law enforcement and the communities they serve, and are examining it to see what options are available to the federal government,” said Tracy Schmaler, a department spokeswoman.
The United States attorney general, Eric H. Holder Jr., has said he worries that the law may intrude on federal authority and lead to racial profiling.
Protest rallies were also held Saturday at the state capitols in Texas and Oregon, as well as in San Francisco, according to The Associated Press.
At the Arizona demonstrations, opinions could not be further apart.
Mireya Chavez Cerna, 43, an illegal immigrant who works as a maid, marched with her 9-year-old son, who was born in the United States and wore a shirt reading “Made in America.”
She denounced the climate of fear in the state and said immigrants like her could not abide the wait of a decade or more for a legal visa while their families grow hungry.
“Do you think we would risk losing our lives crossing the border if we didn’t have a need to come here for a better life?” she said. Supporters of the law “don’t know,” she added. “They don’t understand. They don’t live in Mexico. They don’t know how it is.”
But Ann Hyde, a radiological technologist from Chandler, said she grew frustrated at supporters being tarred as prejudiced or worse.
“We are not racists,” she said. “This law is about respecting the laws of the nation and the economic impact of illegal immigration, which is enormous. My state is broke and they cost us with spending on schools, hospitals and other services.”
Though violent crime is declining in Arizona, as in most other states, and illegal immigration is down at the border, speakers played up crimes that illegal immigrants have been charged with over the years, including shooting of police officers.
“One is too many,” said Mark Spencer, the chairman of a union representing rank-and-file police officers in Phoenix.
Ana Facio Contreras contributed from Phoenix.
Documents Show Early Worries About Safety of Rig
Documents Show Early Worries About Safety of Rig
By IAN URBINA
Copyright by The Associated Press
Published: May 29, 2010
http://www.nytimes.com/2010/05/30/us/30rig.html?th&emc=th
WASHINGTON — Internal documents from BP show that there were serious problems and safety concerns with the Deepwater Horizon rig far earlier than those the company described to Congress last week.
The problems involved the well casing and the blowout preventer, which are considered critical pieces in the chain of events that led to the disaster on the rig.
The documents show that in March, after several weeks of problems on the rig, BP was struggling with a loss of “well control.” And as far back as 11 months ago, it was concerned about the well casing and the blowout preventer.
On June 22, for example, BP engineers expressed concerns that the metal casing the company wanted to use might collapse under high pressure.
“This would certainly be a worst-case scenario,” Mark E. Hafle, a senior drilling engineer at BP, warned in an internal report. “However, I have seen it happen so know it can occur.”
The company went ahead with the casing, but only after getting special permission from BP colleagues because it violated the company’s safety policies and design standards. The internal reports do not explain why the company allowed for an exception. BP documents released last week to The Times revealed that company officials knew the casing was the riskier of two options.
Though his report indicates that the company was aware of certain risks and that it made the exception, Mr. Hafle, testifying before a panel on Friday in Louisiana about the cause of the rig disaster, rejected the notion that the company had taken risks.
“Nobody believed there was going to be a safety issue,” Mr. Hafle told a six-member panel of Coast Guard and Minerals Management Service officials.
“All the risks had been addressed, all the concerns had been addressed, and we had a model that suggested if executed properly we would have a successful job,” he said.
Mr. Hafle, asked for comment by a reporter after his testimony Friday about the internal report, declined to answer questions.
BP’s concerns about the casing did not go away after Mr. Hafle’s 2009 report.
In April of this year, BP engineers concluded that the casing was “unlikely to be a successful cement job,” according to a document, referring to how the casing would be sealed to prevent gases from escaping up the well.
The document also says that the plan for casing the well is “unable to fulfill M.M.S. regulations,” referring to the Minerals Management Service.
A second version of the same document says “It is possible to obtain a successful cement job” and “It is possible to fulfill M.M.S. regulations.”
Andrew Gowers, a BP spokesman, said the second document was produced after further testing had been done.
On Tuesday Congress released a memorandum with preliminary findings from BP’s internal investigation, which indicated that there were warning signs immediately before the explosion on April 20, including equipment readings suggesting that gas was bubbling into the well, a potential sign of an impending blowout.
A parade of witnesses at hearings last week told about bad decisions and cut corners in the days and hours before the explosion of the rig, but BP’s internal documents provide a clearer picture of when company and federal officials saw problems emerging.
In addition to focusing on the casing, investigators are also focusing on the blowout preventer, a fail-safe device that was supposed to slice through a drill pipe in a last-ditch effort to close off the well when the disaster struck. The blowout preventer did not work, which is one of the reasons oil has continued to spill into the gulf, though the reason it failed remains unclear.
Federal drilling records and well reports obtained through the Freedom of Information Act and BP’s internal documents, including more than 50,000 pages of company e-mail messages, inspection reports, engineering studies and other company records obtained by The Times from Congressional investigators, shed new light on the extent and timing of problems with the blowout preventer and the casing long before the explosion.
Kendra Barkoff, a spokeswoman for the Interior Department, declined to answer questions about the casings, the blowout preventer and regulators’ oversight of the rig because those matters are part of a continuing investigation.
The documents show that in March, after problems on the rig that included drilling mud falling into the formation, sudden gas releases known as “kicks” and a pipe falling into the well, BP officials informed federal regulators that they were struggling with a loss of “well control.”
On at least three occasions, BP records indicate, the blowout preventer was leaking fluid, which the manufacturer of the device has said limits its ability to operate properly.
“The most important thing at a time like this is to stop everything and get the operation under control,” said Greg McCormack, director of the Petroleum Extension Service at the University of Texas, Austin, offering his assessment about the documents.
He added that he was surprised that regulators and company officials did not commence a review of whether drilling should continue after the well was brought under control.
After informing regulators of their struggles, company officials asked for permission to delay their federally mandated test of the blowout preventer, which is supposed to occur every two weeks, until the problems were resolved, BP documents say.
At first, the minerals agency declined.
“Sorry, we cannot grant a departure on the B.O.P. test further than when you get the well under control,” wrote Frank Patton, a minerals agency official. But BP officials pressed harder, citing “major concerns” about doing the test the next day. And by 10:58 p.m., David Trocquet, another M.M.S. official, acquiesced.
“After further consideration,” Mr. Trocquet wrote, “an extension is approved to delay the B.O.P. test until the lower cement plug is set.”
When the blowout preventer was eventually tested again, it was tested at a lower pressure — 6,500 pounds per square inch — than the 10,000-pounds-per-square-inch tests used on the device before the delay. It tested at this lower pressure until the explosion.
A review of Minerals Management Service’s data of all B.O.P. tests done in deep water in the Gulf of Mexico for five years shows B.O.P. tests rarely dropped so sharply, and, in general, either continued at the same threshold or were done at increasing levels.
The manufacturer of the blowout preventer, Cameron, declined to say what the appropriate testing pressure was for the device.
In an e-mail message, Mr. Gowers of BP wrote that until their investigation was complete, it was premature to answer questions about the casings or the blowout preventer.
Even though the documents asking regulators about testing the blowout preventer are from BP, Mr. Gowers said that any questions regarding the device should be directed to Transocean, which owns the rig and, he said, was responsible for maintenance and testing of the device. Transocean officials declined to comment.
Bob Sherrill, an expert on blowout preventers and the owner of Blackwater Subsea, an engineering consulting firm, said the conditions on the rig in February and March and the language used by the operator referring to a loss of well control “sounds like they were facing a blowout scenario.”
Mr. Sherrill said federal regulators made the right call in delaying the blowout test, because doing a test before the well is stable risks gas kicks. But once the well was stable, he added, it would have made sense for regulators to investigate the problems further.
In April, the month the rig exploded, workers encountered obstructions in the well. Most of the problems were conveyed to federal regulators, according to federal records. Many of the incidents required that BP get a permit for a new tactic for dealing with the problem.
One of the final indications of such problems was an April 15 request for a permit to revise its plan to deal with a blockage, according to federal documents obtained from Congress by the Center for Biological Diversity, an environmental advocacy group.
In the documents, company officials apologized to federal regulators for not having mentioned the type of casing they were using earlier, adding that they had “inadvertently” failed to include it. In the permit request, they did not disclose BP’s own internal concerns about the design of the casing.
Less than 10 minutes after the request was submitted, federal regulators approved the permit.
Robbie Brown contributed reporting from Kenner, La., and Andy Lehren from New York.
By IAN URBINA
Copyright by The Associated Press
Published: May 29, 2010
http://www.nytimes.com/2010/05/30/us/30rig.html?th&emc=th
WASHINGTON — Internal documents from BP show that there were serious problems and safety concerns with the Deepwater Horizon rig far earlier than those the company described to Congress last week.
The problems involved the well casing and the blowout preventer, which are considered critical pieces in the chain of events that led to the disaster on the rig.
The documents show that in March, after several weeks of problems on the rig, BP was struggling with a loss of “well control.” And as far back as 11 months ago, it was concerned about the well casing and the blowout preventer.
On June 22, for example, BP engineers expressed concerns that the metal casing the company wanted to use might collapse under high pressure.
“This would certainly be a worst-case scenario,” Mark E. Hafle, a senior drilling engineer at BP, warned in an internal report. “However, I have seen it happen so know it can occur.”
The company went ahead with the casing, but only after getting special permission from BP colleagues because it violated the company’s safety policies and design standards. The internal reports do not explain why the company allowed for an exception. BP documents released last week to The Times revealed that company officials knew the casing was the riskier of two options.
Though his report indicates that the company was aware of certain risks and that it made the exception, Mr. Hafle, testifying before a panel on Friday in Louisiana about the cause of the rig disaster, rejected the notion that the company had taken risks.
“Nobody believed there was going to be a safety issue,” Mr. Hafle told a six-member panel of Coast Guard and Minerals Management Service officials.
“All the risks had been addressed, all the concerns had been addressed, and we had a model that suggested if executed properly we would have a successful job,” he said.
Mr. Hafle, asked for comment by a reporter after his testimony Friday about the internal report, declined to answer questions.
BP’s concerns about the casing did not go away after Mr. Hafle’s 2009 report.
In April of this year, BP engineers concluded that the casing was “unlikely to be a successful cement job,” according to a document, referring to how the casing would be sealed to prevent gases from escaping up the well.
The document also says that the plan for casing the well is “unable to fulfill M.M.S. regulations,” referring to the Minerals Management Service.
A second version of the same document says “It is possible to obtain a successful cement job” and “It is possible to fulfill M.M.S. regulations.”
Andrew Gowers, a BP spokesman, said the second document was produced after further testing had been done.
On Tuesday Congress released a memorandum with preliminary findings from BP’s internal investigation, which indicated that there were warning signs immediately before the explosion on April 20, including equipment readings suggesting that gas was bubbling into the well, a potential sign of an impending blowout.
A parade of witnesses at hearings last week told about bad decisions and cut corners in the days and hours before the explosion of the rig, but BP’s internal documents provide a clearer picture of when company and federal officials saw problems emerging.
In addition to focusing on the casing, investigators are also focusing on the blowout preventer, a fail-safe device that was supposed to slice through a drill pipe in a last-ditch effort to close off the well when the disaster struck. The blowout preventer did not work, which is one of the reasons oil has continued to spill into the gulf, though the reason it failed remains unclear.
Federal drilling records and well reports obtained through the Freedom of Information Act and BP’s internal documents, including more than 50,000 pages of company e-mail messages, inspection reports, engineering studies and other company records obtained by The Times from Congressional investigators, shed new light on the extent and timing of problems with the blowout preventer and the casing long before the explosion.
Kendra Barkoff, a spokeswoman for the Interior Department, declined to answer questions about the casings, the blowout preventer and regulators’ oversight of the rig because those matters are part of a continuing investigation.
The documents show that in March, after problems on the rig that included drilling mud falling into the formation, sudden gas releases known as “kicks” and a pipe falling into the well, BP officials informed federal regulators that they were struggling with a loss of “well control.”
On at least three occasions, BP records indicate, the blowout preventer was leaking fluid, which the manufacturer of the device has said limits its ability to operate properly.
“The most important thing at a time like this is to stop everything and get the operation under control,” said Greg McCormack, director of the Petroleum Extension Service at the University of Texas, Austin, offering his assessment about the documents.
He added that he was surprised that regulators and company officials did not commence a review of whether drilling should continue after the well was brought under control.
After informing regulators of their struggles, company officials asked for permission to delay their federally mandated test of the blowout preventer, which is supposed to occur every two weeks, until the problems were resolved, BP documents say.
At first, the minerals agency declined.
“Sorry, we cannot grant a departure on the B.O.P. test further than when you get the well under control,” wrote Frank Patton, a minerals agency official. But BP officials pressed harder, citing “major concerns” about doing the test the next day. And by 10:58 p.m., David Trocquet, another M.M.S. official, acquiesced.
“After further consideration,” Mr. Trocquet wrote, “an extension is approved to delay the B.O.P. test until the lower cement plug is set.”
When the blowout preventer was eventually tested again, it was tested at a lower pressure — 6,500 pounds per square inch — than the 10,000-pounds-per-square-inch tests used on the device before the delay. It tested at this lower pressure until the explosion.
A review of Minerals Management Service’s data of all B.O.P. tests done in deep water in the Gulf of Mexico for five years shows B.O.P. tests rarely dropped so sharply, and, in general, either continued at the same threshold or were done at increasing levels.
The manufacturer of the blowout preventer, Cameron, declined to say what the appropriate testing pressure was for the device.
In an e-mail message, Mr. Gowers of BP wrote that until their investigation was complete, it was premature to answer questions about the casings or the blowout preventer.
Even though the documents asking regulators about testing the blowout preventer are from BP, Mr. Gowers said that any questions regarding the device should be directed to Transocean, which owns the rig and, he said, was responsible for maintenance and testing of the device. Transocean officials declined to comment.
Bob Sherrill, an expert on blowout preventers and the owner of Blackwater Subsea, an engineering consulting firm, said the conditions on the rig in February and March and the language used by the operator referring to a loss of well control “sounds like they were facing a blowout scenario.”
Mr. Sherrill said federal regulators made the right call in delaying the blowout test, because doing a test before the well is stable risks gas kicks. But once the well was stable, he added, it would have made sense for regulators to investigate the problems further.
In April, the month the rig exploded, workers encountered obstructions in the well. Most of the problems were conveyed to federal regulators, according to federal records. Many of the incidents required that BP get a permit for a new tactic for dealing with the problem.
One of the final indications of such problems was an April 15 request for a permit to revise its plan to deal with a blockage, according to federal documents obtained from Congress by the Center for Biological Diversity, an environmental advocacy group.
In the documents, company officials apologized to federal regulators for not having mentioned the type of casing they were using earlier, adding that they had “inadvertently” failed to include it. In the permit request, they did not disclose BP’s own internal concerns about the design of the casing.
Less than 10 minutes after the request was submitted, federal regulators approved the permit.
Robbie Brown contributed reporting from Kenner, La., and Andy Lehren from New York.
Saturday, May 29, 2010
‘Top Kill’ Fails to Plug Leak; BP Readies Next Approach
‘Top Kill’ Fails to Plug Leak; BP Readies Next Approach
By CLIFFORD KRAUSS and LESLIE KAUFMAN
Copyright by the New York Times
Published: May 29, 2010
http://www.nytimes.com/2010/05/30/us/30spill.html?hp
HOUSTON — BP said Saturday that its latest attempt to stop the gushing oil well in the Gulf of Mexico was unsuccessful, and the effort, known as a “top kill,” was being scrapped in favor of yet another maneuver to stem the flow spreading into the waters.
The announcement marked the latest setback in the attempt to plug the spill that is polluting gulf waters at an estimated rate of 12,000 to 19,000 barrels a day. This is already the largest spill in U.S. history.
Doug Suttles, BP’s chief operating officer, said the next step is called a “lower marine riser package cap” and involves sawing off the riser and placing a device atop it to capture the escaping oil. Equipment has already been deployed on land and on the sea bed, he said.
“We have made the decision to move on to the next option," Mr. Suttles said. “Repeated pumping, we don’t believe, will likely achieve success.”
The failure of the top kill procedure, which was thought to be the company’s best option for stopping the leak, was announced after about 30,000 barrels of mud was injected into the well and three attempts were made at what is termed the “junk shot,” a procedure that involves pumping odds and ends like plastic cubes, knotted rope, and golf balls into the blowout preventer, the five-story safety device atop the well.
Earlier in the day on Saturday, Mr. Suttles had said it was too soon to tell whether the top kill procedure was working, but had appeared doubtful that it was going to be the answer.
“I don’t think the amount of oil coming out has changed,” he said. If this latest attempt is unsuccessful, a relief well is the option experts say is most reliably going to stop the current catastrophe. But could take until August to drill a relief well.
“People want to know which technique is going to work, and I don’t know. It hasn’t been done at these depths and that’s why we’ve had multiple options working parallel.”
Mr. Suttles also used the press conference Saturday afternoon to defend BP’s clean-up efforts, which have come under fierce criticism from local politicians for being too little too late.
“We have been ramping up the activity every single day,” he said referring to the workers that are being brought in to mop up the rust-colored goo that is washing ashore along the coast here. “We and the Coast Guard are bringing in additional resources,” he said.
BP estimates it has nearly 2,000 workers already along the coast according to David Nicholas, BP spokesman. Mr. Suttles said the company was somewhat hampered in its efforts to be aggressive by the delicate nature of the ecosystem. “We don’t want to create more harm in doing the cleanup than the oil creates on its own,” he said.
Nevertheless, he added, BP was not only bringing in more people it was working on ways to get them to more inaccessible areas of the coast. He said they were going to start using tent cities and “flo-tels,” or floating hotels, to house workers closer to hard to reach marsh lands being covered with oil.
Clifford Krauss reported from Houston and Leslie Kaufman from New Orleans. Liz Robbins and Sarah Wheaton contributed reporting from New York.
By CLIFFORD KRAUSS and LESLIE KAUFMAN
Copyright by the New York Times
Published: May 29, 2010
http://www.nytimes.com/2010/05/30/us/30spill.html?hp
HOUSTON — BP said Saturday that its latest attempt to stop the gushing oil well in the Gulf of Mexico was unsuccessful, and the effort, known as a “top kill,” was being scrapped in favor of yet another maneuver to stem the flow spreading into the waters.
The announcement marked the latest setback in the attempt to plug the spill that is polluting gulf waters at an estimated rate of 12,000 to 19,000 barrels a day. This is already the largest spill in U.S. history.
Doug Suttles, BP’s chief operating officer, said the next step is called a “lower marine riser package cap” and involves sawing off the riser and placing a device atop it to capture the escaping oil. Equipment has already been deployed on land and on the sea bed, he said.
“We have made the decision to move on to the next option," Mr. Suttles said. “Repeated pumping, we don’t believe, will likely achieve success.”
The failure of the top kill procedure, which was thought to be the company’s best option for stopping the leak, was announced after about 30,000 barrels of mud was injected into the well and three attempts were made at what is termed the “junk shot,” a procedure that involves pumping odds and ends like plastic cubes, knotted rope, and golf balls into the blowout preventer, the five-story safety device atop the well.
Earlier in the day on Saturday, Mr. Suttles had said it was too soon to tell whether the top kill procedure was working, but had appeared doubtful that it was going to be the answer.
“I don’t think the amount of oil coming out has changed,” he said. If this latest attempt is unsuccessful, a relief well is the option experts say is most reliably going to stop the current catastrophe. But could take until August to drill a relief well.
“People want to know which technique is going to work, and I don’t know. It hasn’t been done at these depths and that’s why we’ve had multiple options working parallel.”
Mr. Suttles also used the press conference Saturday afternoon to defend BP’s clean-up efforts, which have come under fierce criticism from local politicians for being too little too late.
“We have been ramping up the activity every single day,” he said referring to the workers that are being brought in to mop up the rust-colored goo that is washing ashore along the coast here. “We and the Coast Guard are bringing in additional resources,” he said.
BP estimates it has nearly 2,000 workers already along the coast according to David Nicholas, BP spokesman. Mr. Suttles said the company was somewhat hampered in its efforts to be aggressive by the delicate nature of the ecosystem. “We don’t want to create more harm in doing the cleanup than the oil creates on its own,” he said.
Nevertheless, he added, BP was not only bringing in more people it was working on ways to get them to more inaccessible areas of the coast. He said they were going to start using tent cities and “flo-tels,” or floating hotels, to house workers closer to hard to reach marsh lands being covered with oil.
Clifford Krauss reported from Houston and Leslie Kaufman from New Orleans. Liz Robbins and Sarah Wheaton contributed reporting from New York.
G.O.P. Senate Candidate from Illinois Acknowledges Incorrect Reference to Award
G.O.P. Senate Candidate from Illinois Acknowledges Incorrect Reference to Award
By MONICA DAVEY
Copyright by The New York Times
Published: May 29, 2010
http://www.nytimes.com/2010/05/30/us/politics/30kirk.html?hpw
CHICAGO — Mark S. Kirk, the Republican candidate seeking the United States Senate seat once held by President Obama, has acknowledged that his official biography incorrectly listed a prestigious military award that he never received.
Mr. Kirk, a five-term congressman from the northern suburbs of this city who is also an intelligence officer in the Naval Reserve, conceded the discrepancy on his campaign blog.
The circumstances were first described Saturday on the Web site of The Washington Post, which had been making inquiries into Mr. Kirk’s portrayal of his military honors last week. The Post reported that its questions were prompted by “complaints from a representative of” Alexi Giannoulias, the Democratic nominee, who is thought to be in a competitive race with Mr. Kirk for the Senate seat here.
In a posting dated Thursday on Mr. Kirk’s campaign blog, Mr. Kirk, who holds the military rank of commander, seemed to portray the error as a mix-up over awards for the work he did during NATO’s conflict with Serbia just over a decade ago.
“Upon a recent review of my records, I found that an award listed in my official biography was misidentified as ‘Intelligence Officer of the Year,’ ” Mr. Kirk wrote. “In fact, as noted in my fitness report, I was the ‘recipient of the Rufus Taylor Intelligence Unit of the Year award for outstanding support provided during Operation Allied Force.’ ”
His blog posting continued: “It was one of the honors of my life to lead the Intelligence Division Electronic Attack Wing Aviano, Italy — and I am very proud of this award. My official biography will reflect this updated information.”
But Mr. Kirk himself described winning the other award during a Congressional budget hearing on March 13, 2002. “I was the Navy’s intelligence officer of the year in 1998,” Mr. Kirk said, according to a recording made that day by C-Span.
Eric Elk, a spokesman for Mr. Kirk, said he had yet to watch the recording and could not comment on it. A statement, issued late Saturday by the campaign, offered high praise for Mr. Kirk from one of his former commanding officers.
“Mark was the best intelligence officer I ever worked with,” Clay Fearnow, the retired officer, was quoted as saying.
Kathleen Strand, a spokeswoman for Mr. Giannoulias’s campaign, seemed dismissive of Mr. Kirk’s explanation.
“The story speaks for itself and is part of a troubling pattern,” she said. Mr. Giannoulias, the state treasurer, who has not served in the military, and Mr. Kirk, whose campaign has stressed his service during conflicts that include Afghanistan, Iraq and Haiti, are already engaged in a bitter campaign.
Though Republicans currently hold no statewide offices in Illinois, Democrats have been viewed as vulnerable after corruption charges against Rod R. Blagojevich, a Democrat and the former governor. Though Mr. Giannoulias is an old friend of President Obama, some in the White House had urged another Democrat — the state’s attorney general — to run for the seat, which carries special symbolism.
By MONICA DAVEY
Copyright by The New York Times
Published: May 29, 2010
http://www.nytimes.com/2010/05/30/us/politics/30kirk.html?hpw
CHICAGO — Mark S. Kirk, the Republican candidate seeking the United States Senate seat once held by President Obama, has acknowledged that his official biography incorrectly listed a prestigious military award that he never received.
Mr. Kirk, a five-term congressman from the northern suburbs of this city who is also an intelligence officer in the Naval Reserve, conceded the discrepancy on his campaign blog.
The circumstances were first described Saturday on the Web site of The Washington Post, which had been making inquiries into Mr. Kirk’s portrayal of his military honors last week. The Post reported that its questions were prompted by “complaints from a representative of” Alexi Giannoulias, the Democratic nominee, who is thought to be in a competitive race with Mr. Kirk for the Senate seat here.
In a posting dated Thursday on Mr. Kirk’s campaign blog, Mr. Kirk, who holds the military rank of commander, seemed to portray the error as a mix-up over awards for the work he did during NATO’s conflict with Serbia just over a decade ago.
“Upon a recent review of my records, I found that an award listed in my official biography was misidentified as ‘Intelligence Officer of the Year,’ ” Mr. Kirk wrote. “In fact, as noted in my fitness report, I was the ‘recipient of the Rufus Taylor Intelligence Unit of the Year award for outstanding support provided during Operation Allied Force.’ ”
His blog posting continued: “It was one of the honors of my life to lead the Intelligence Division Electronic Attack Wing Aviano, Italy — and I am very proud of this award. My official biography will reflect this updated information.”
But Mr. Kirk himself described winning the other award during a Congressional budget hearing on March 13, 2002. “I was the Navy’s intelligence officer of the year in 1998,” Mr. Kirk said, according to a recording made that day by C-Span.
Eric Elk, a spokesman for Mr. Kirk, said he had yet to watch the recording and could not comment on it. A statement, issued late Saturday by the campaign, offered high praise for Mr. Kirk from one of his former commanding officers.
“Mark was the best intelligence officer I ever worked with,” Clay Fearnow, the retired officer, was quoted as saying.
Kathleen Strand, a spokeswoman for Mr. Giannoulias’s campaign, seemed dismissive of Mr. Kirk’s explanation.
“The story speaks for itself and is part of a troubling pattern,” she said. Mr. Giannoulias, the state treasurer, who has not served in the military, and Mr. Kirk, whose campaign has stressed his service during conflicts that include Afghanistan, Iraq and Haiti, are already engaged in a bitter campaign.
Though Republicans currently hold no statewide offices in Illinois, Democrats have been viewed as vulnerable after corruption charges against Rod R. Blagojevich, a Democrat and the former governor. Though Mr. Giannoulias is an old friend of President Obama, some in the White House had urged another Democrat — the state’s attorney general — to run for the seat, which carries special symbolism.
Beck apologizes for mocking Obama’s daughter
Beck apologizes for mocking Obama’s daughter
Copyright by CNN News
Posted: May 29th, 2010 04:04 PM ET
http://politicalticker.blogs.cnn.com/2010/05/29/beck-apologizes-for-mocking-obama%E2%80%99s-daughter/?fbid=LpcWLxi1v_4
(CNN) – Conservative talk-show host Glenn Beck apologized Friday after appearing to mock President Barack Obama’s 11-year-old daughter on his radio program earlier in the day.
In a statement posted on his website Friday afternoon, Beck said he broke his own rule about “leaving kids out of political debates.”
“In discussing how President Obama uses children to shield himself from criticism, I broke my own rule about leaving kids out of political debates,” said Beck in the statement. “The children of public figures should be left on the sidelines. It was a stupid mistake and I apologize–and as a dad I should have known better.”
Beck’s apology came hours after the radio host and his sidekicks imitated a pretend conversation between the president and Malia, in which Beck has his version of 11-year-old ask a series of questions that included “Daddy…why do you hate black people so much?”
Beck’s routine was prompted by a remark Obama made in his press conference Thursday, in which he said Malia had asked him earlier in the morning of the BP oil spill, "Did you plug the hole yet, Daddy?"
"Is that's their - that's the level of their education, that they're coming to - they're coming to daddy and saying 'Daddy, did you plug the hole yet?' Plug the hole!" said Beck of Malia's comments.
The White House has not responded to Beck’s comments.
Copyright by CNN News
Posted: May 29th, 2010 04:04 PM ET
http://politicalticker.blogs.cnn.com/2010/05/29/beck-apologizes-for-mocking-obama%E2%80%99s-daughter/?fbid=LpcWLxi1v_4
(CNN) – Conservative talk-show host Glenn Beck apologized Friday after appearing to mock President Barack Obama’s 11-year-old daughter on his radio program earlier in the day.
In a statement posted on his website Friday afternoon, Beck said he broke his own rule about “leaving kids out of political debates.”
“In discussing how President Obama uses children to shield himself from criticism, I broke my own rule about leaving kids out of political debates,” said Beck in the statement. “The children of public figures should be left on the sidelines. It was a stupid mistake and I apologize–and as a dad I should have known better.”
Beck’s apology came hours after the radio host and his sidekicks imitated a pretend conversation between the president and Malia, in which Beck has his version of 11-year-old ask a series of questions that included “Daddy…why do you hate black people so much?”
Beck’s routine was prompted by a remark Obama made in his press conference Thursday, in which he said Malia had asked him earlier in the morning of the BP oil spill, "Did you plug the hole yet, Daddy?"
"Is that's their - that's the level of their education, that they're coming to - they're coming to daddy and saying 'Daddy, did you plug the hole yet?' Plug the hole!" said Beck of Malia's comments.
The White House has not responded to Beck’s comments.
Saturday, May 15, 2010
Big seller in market drop ID'ed as Waddell & Reed
Big seller in market drop ID'ed as Waddell & Reed
By DAVID PITT
Copyright by the Associated Press
May 14, 2010
http://www.thesunnews.com/2010/05/14/1474779/big-seller-in-market-drop-ided.html?storylink=mirelated
DES MOINES, Iowa -- Shares of money manager Waddell & Reed Financial Inc. fell Friday as it was identified as the stock trader that sold off a large number of index futures contracts during last Thursday's market collapse.
The company's stock fell $1.81, or 5 percent, to $32.25, on a day when broader markets fell nearly 2 percent.
Waddell's sale of 75,000 e-mini futures contracts in a 20-minute span on May 6 drew the attention of regulators, Thomson Reuters reported.
E-minis are tied to the value of the S&P 500 index. They're traded electronically on the Chicago Mercantile Exchange.
Overland Park, Kan.-based Waddell & Reed, which provides mutual funds and asset management services, said its trading of e-mini contracts was part of its normal operation to protect fund investors from market risk.
"The portfolio managers in those flexible portfolio funds often make hedging trades to attempt to protect shareholders from downside risk. And that's what was happening in that case," spokesman Roger Hoadley said.
Waddell & Reed said it was one of more than 250 companies that traded e-mini securities as the stock market plunged. The Dow Jones industrials lost nearly 1,000 points, nearly a tenth of their value in less than half an hour. It was the biggest drop ever in a trading day. The Dow recovered two-thirds of the loss before the closing bell, but the free fall prompted close scrutiny of that day's trading as regulators try to figure out what caused the sell-off.
SEC Chairman Mary Schapiro said Tuesday in testimony before the House Financial Services subcommittee on capital markets that her agency has yet to pinpoint the reason for the sell-off.
Six major U.S. securities exchanges on Monday agreed in principle to a uniform system of "circuit breakers," which could slow trading during sharp market swings. Most of the 50 U.S. exchanges regulate themselves and design their own tools for slowing or halting trading.
Schapiro and her fellow SEC commissioners will review the recommendations submitted by the exchanges for a marketwide system of circuit breakers, SEC spokesman John Nester said after the hearing.
Once the market started falling, automated computer trading intensified the downturn. The selling only led to more selling as prices plummeted and traders tried to limit their losses.
Waddell & Reed said it, like many other traders, was affected negatively by the market activity of May 6.
The CME and regulators at the Commodity Futures Trading Commission declined to comment on Friday.
In congressional testimony this week Schapiro and Gary Gensler, head of the CFTC, said e-mini contract trading was believed to have lead to steep stock price declines.
Gensler testified that one trader took a large short position in the e-mini, selling "on the way down and (continuing) to do so even as the price level recovered." He didn't name the trader.
Waddell's spokesman said the company has not been contacted by regulators or the CME about the May 6 trading.
By DAVID PITT
Copyright by the Associated Press
May 14, 2010
http://www.thesunnews.com/2010/05/14/1474779/big-seller-in-market-drop-ided.html?storylink=mirelated
DES MOINES, Iowa -- Shares of money manager Waddell & Reed Financial Inc. fell Friday as it was identified as the stock trader that sold off a large number of index futures contracts during last Thursday's market collapse.
The company's stock fell $1.81, or 5 percent, to $32.25, on a day when broader markets fell nearly 2 percent.
Waddell's sale of 75,000 e-mini futures contracts in a 20-minute span on May 6 drew the attention of regulators, Thomson Reuters reported.
E-minis are tied to the value of the S&P 500 index. They're traded electronically on the Chicago Mercantile Exchange.
Overland Park, Kan.-based Waddell & Reed, which provides mutual funds and asset management services, said its trading of e-mini contracts was part of its normal operation to protect fund investors from market risk.
"The portfolio managers in those flexible portfolio funds often make hedging trades to attempt to protect shareholders from downside risk. And that's what was happening in that case," spokesman Roger Hoadley said.
Waddell & Reed said it was one of more than 250 companies that traded e-mini securities as the stock market plunged. The Dow Jones industrials lost nearly 1,000 points, nearly a tenth of their value in less than half an hour. It was the biggest drop ever in a trading day. The Dow recovered two-thirds of the loss before the closing bell, but the free fall prompted close scrutiny of that day's trading as regulators try to figure out what caused the sell-off.
SEC Chairman Mary Schapiro said Tuesday in testimony before the House Financial Services subcommittee on capital markets that her agency has yet to pinpoint the reason for the sell-off.
Six major U.S. securities exchanges on Monday agreed in principle to a uniform system of "circuit breakers," which could slow trading during sharp market swings. Most of the 50 U.S. exchanges regulate themselves and design their own tools for slowing or halting trading.
Schapiro and her fellow SEC commissioners will review the recommendations submitted by the exchanges for a marketwide system of circuit breakers, SEC spokesman John Nester said after the hearing.
Once the market started falling, automated computer trading intensified the downturn. The selling only led to more selling as prices plummeted and traders tried to limit their losses.
Waddell & Reed said it, like many other traders, was affected negatively by the market activity of May 6.
The CME and regulators at the Commodity Futures Trading Commission declined to comment on Friday.
In congressional testimony this week Schapiro and Gary Gensler, head of the CFTC, said e-mini contract trading was believed to have lead to steep stock price declines.
Gensler testified that one trader took a large short position in the e-mini, selling "on the way down and (continuing) to do so even as the price level recovered." He didn't name the trader.
Waddell's spokesman said the company has not been contacted by regulators or the CME about the May 6 trading.
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