Slashdot Mirror
A $251 Million Typo
theodp writes "A Taiwan stock trader is jobless after a typo left her company looking at a paper loss of more than $12 million when what was supposed to have been a small order mistakenly resulted in a $251 million purchase. 'Something like this is difficult to explain to superiors,' a company exec explained."
Hmm, I don't think a simple "whoops" would suffice here ;)
She gets fired, and they keep the stock as they expect to profit from it...
Why is she getting fired and not trained?
AXJZTOS
What's even harder to explain is how 1 person from 1 keyboard has the power to kill a company. Do they have to seize the moment that desperately that even a simple check cannot be done?
see a Text Widget
This is somewhat confusing to me - wouldn't a stock firm have some software (if this is an electronic transaction, which it appears to be) with a CONFIRMATION PAGE or something? Or warnings on massive orders? This just seems like a basic 'good design' feature to me...you can't particularly blame the individual here, it is just her random misfortune to be the one to have made that error - if not her it would have been some other employee.
What is this - dumpest investment bank ever? * They let a trader onto an unsecured system without proper training (unfamiliar with computer system). * The system is ocnfigured/programmed in such a way that there are no max trade orders, no security precautions, nothing at all in place. What is so hard to explain here? I was dump, I did not make sure my trader was property trained and the system we ordered lacked any fundamental security precautions. Poor trader - a dcase of a software/management fuckup and he has to pay.
Looks like a company to never do business with. The article implies that they had a new computer system and didn't train their employees. Uncertainty in the new program caused an incorrect purchase, resulting in their loss. Rather than fix the problem by educating their employee(s), they fire the employee that made a typo.
Sucks that such a costly mistake was made. Next time maybe they should ensure that their employees know what they're doing before putting them live on trades.
I've worked in market data systems for years. I can see how someone unfamiliar could flub an order. Inexperienced staff are typically be put on a rather short leash (ie. system madated spending limits and such). It would be a shame if she were the only person to lose her job over this. There are (or should be) a host of people responsible for making sure this sort of thing doesn't happen. Seems some of them should be sacked as well!
The cnet article claims the company plans to keep the shares.
Not so. Here's the official press release.
Fubon Securities settles stock trading error in timely fashion.
Under the fundamental principle of not affecting the local stock market, Fubon Securities today smoothly unloaded all NT$7.7 billion worth of shares it mistakenly purchased yesterday for a client by inadvertently keying in an incorrect figure, with its own dealer department absorbing some NT$5 billion worth of the shares unloaded. The company will properly adjust its shareholding positions based on market conditions.
Fubon Securities said that immediately after the undesirable error occurred, the company activated its crisis management system and sold off NT$800 million worth of shares yesterday. The firms crisis-handling panel, under the principle of minimizing any possible impact on the local bourse, smoothly unloaded all remaining positions in mistakenly purchased shares today, with some NT$5 billion worth of stock certificates in 230 issues taken over by the firms own dealer department. Judging from todays performance in the local stock market, the massive corrective operation did not in any way have negative impact on the bourse.
As investors are concerned about the impact of this event on the earnings performances of both Fubon Securities and Fubon Financial, Fubon Securities reports that total losses ensuing from the stock-unloading operation did not exceed NT$470 million and were equivalent to the firms total pretax earnings recorded in the first five months of the year. If including the increased earnings in June caused by an upturn in stock turnover, Fubon Securities earnings for the first half of the year will still surpass those of some other local brokerage houses. The firm is still guardedly optimistic about its overall earnings record for the full year, based on prospects for the economy in the second half of the year.
Of course, all those numbers are in Taiwan dollars...
I just feel sorry for the woman who lost her job because some idiot forgot to make a big, red "WARNING" page in software that important.
Where is clippy when you need him?! "Hi, it looks like your trying to buy a quarter billion dollars of stock! Can I help? I suggest MSFT instead."
Here's how i would have designed the application...
Warning: You're about to spend $251,000,000! That is a lot of Fucking money! Are you sure you wish to continue [OK] [Cancel]
Hey now... I know you said ok... but that really is a fuckload of money.. are you serious about this purchase? [OK] [Cancel]
Ok... But don't say I didn't warn ya. Please press the OK button 50 more times to confirm or Cancel if you change your mind [OK] [Cancel]
Seriously tho.. $12 million in losses... Why not fire some programmers while you're at it.
-- Knowledge shared is power lost. -- Aleister Crowley
Not necessarily. Professional trading systems often enter in order based on a lot size. You don't generally enter into a system how many shares you want, but how many lots you want. And lot sizes can vary and are often configurable for each terminal or even on a per stock basis. So for instance if you key in 250, if the lot size is 1000, you are actually buying 250x1000, or 250,000 shares. Who knows how the system was configured and if the lot size was displayed prominently in the UI (there are a lot of really bad trading UIs). One thing is for sure. Any competent risk management system would not have caught this.
Fouled up by one number, perhaps?
"'Something like this is difficult to explain to superiors,' a company exec explained."
I propose laying off those superiors instead, as they have trouble understanding something that can be quite easily explained in a slashdot summary...
This space is intentionally staring blankly at you
This article exemplifies teh improtance of company culture.
For several years I worked for a US bank with the highest possible bond rating. Though smaller (at the time) than the national banks we all think of today, this bank was well known for its culture of prudence and the quality of our lending.
Why is this important? Because it rolled right over into the IT departments. From suppliers to product purchasing to in house software, everything was done very much "by the book" and we didn't care if we weren't doing things the latest and greatest because we wanted to do things right. And yes, our banking systems had limits on everything so a junior banker could never make a $1,000,000 loan by misplacing a decimal.
It contrasted sharply with my stint in a dot-com where things were fast, furious, and being "by the book" was laughable. Cutting edge might have been cool then, but the bank I worked for is now one of the nations largest, and the dot-com is a dot-bomb.
I only came here to do two things; kick some ass, and drink some beer...looks like we're almost out of beer.
Slashdot at its best. Look, if you fuck up so badly that you cause your company millions of dollars in immediate losses and expect the people in charge who enabled you to fuck up (not the ones who actually fucked up, because that's you) to take the responsibility for you instead of you, then you're a fool.
Are there going to be policy changes because of this? Of course, duh (and by the way, the article says that). Should there be recriminations for the people involved who allowed this person to do what was done? Yes, and there almost certainly will be, even if behind the scenes and out of sight. Should the person who screwed up be allowed to continue? Of course not; given the power to make such transactions they failed in a grotesque manner.
Is this person helpless? Is she unable to fend for herself in the world? Is she not responsible for her own actions, positive or negative? She did something, she screwed it up in a major way, and she should suffer the consequences of it. Other heads will roll, but before you chop the heads off of the people who allowed someone to do something massively stupid, you first fire the person who actually did something massively stupid.
I mean, really, this is kind of silly. Do you think that this person was authorized to make penny (well, whatever the Taiwanese equivalent is) stock purchases and accidentally typed six or seven more zeroes? No. Obviously this was someone authorized to make major transactions. She, unfortunately for her, accidentally made a purchase even more major than she had intended. You can blame procedures and software and management all you want, but do you really think that someone authorized to make major transactions shouldn't be really, really careful about it while doing it? And if such a person isn't, are they blameless?
Bank web sites suck. All of them. Especially USAA's, if you have the displeasure of using that one.
Tip to would-be bank websites: disable the autocomplete feature on the "Amount of funds to transfer" field. Nothing sucks like a web browser adding an extra 0 to your transfer. For that matter, disable autocomplete on all fields relating to money.
Having just done lots of risk-analysis reviews on multiple banking application, I cannot understand how a company doesn't employ a 4-eyes principle for any transaction above 10 Million, and needs a manager release for above 50 Million.
Eurex is fine, but when the staff using the application is limited, you don't get separation of duties or rotation of duties, and you can still be faced with a setup where 1 user has too much power.
if amount > big_number
Its not hard stuff. Most finance companies (from my experience) do have safeguards in place, the fact this one doesn't has done far more than give it a $12m loss, it has warned the market that this company has lax risk controls and higher risk charges should be applied to it.
The trader should get fired, they are employed and payed to do an accurate job. The compliance officer should also get fired, because the buck stops with them.
The primary fault lies with the developer who failed to adeqautely validate input. Data validation means more than just making sure you don't have an alpha character in a numeric field; it includes sanity checking to make sure data are within reasonable ranges, and requiring additional confirmation (ranging from "Whoa, dude! That much?" to supervisor approval) when input is outside that.
http://alternatives.rzero.com/
He just pressed the wrong key.
OK Cancel dialog boxes are bad. They are only used because some OS and platform vendors made them easy, and most programmers are too lazy or unaware of interface design to do it correctly. Any decent desktop platform should make the call:
dialogbox(introduction, button1text, [button2text, [button3text, [...]]])
The platform decides the height and width of the dialogbox and the buttons based on the contents. Button placement is decided by the button texts: if several button texts are short, they are placed in a horizontal row. Return value is the number of the button pushed.
This makes the platform simpler with only one dialogbox function for any number of buttons. It encourages developers to make the buttons meaningful. And consumers read the buttons rather than "click OK" because every dialogbox is different.
Bad:
Are you certain you want to give away $1 million?
[OK] [Cancel]
Good:
[Give away $1 million]
[Let me try something else]
I spend my life entertaining my brain.
How is this even remotely insightful?
Let's see, jump from a claim that this is 'publicity for Merrill Lynch' (WTF!?) to an accusation that this is some massive fraud perpetrated between Fubon and Merrill Lynch (which must be so blindingly obvious to the poster since he/she backs this up with, well, zero facts and much wild speculation).
Then a non-sequitur about Fubon Securities stock rising a miniscule amount.
Then a litany of guilty-by-association links.
Then more wild speculation (Oh, there are books about it! No one who writes a book could lie, or be mistaken, or be a fucking inept retard!).
So this poster makes the four thousand leaps of faith from typing error to widespread corruption, and gets modded insightful.
Riiiiiiiiiiiiiiight.
Finally someone who is reading with a critical eye. A $251 million dollar typo? I think not. A $12 million dollar paper loss? Considering that they don't plan on selling the stock, their unrealized profit or loss is rather speculative.
Not knowing all the facts of the case, I'm not willing to jump into the premise that there is a larger multi-corporation conspiracy involving Merrill Lynch but it is almost certain that the Taiwanese trading firm is not telling the truth and that this is a cover story.
Just goes to show how guilable people are. Tell them any old story--no matter how ridiculous--and not only will they believe it, but they will also defend it.
Now, as for the claim that "most of what is written about the financial markets is fraudulent in some way" -- you care to back that up? Because thats a statement with almost no content other than a manipulative intent to induce the reader to distrust what is written about the markets. Even if the fraud tally is "billions of dollars", that is a small fraction of the overall market size and furthermore, your claim wasn't about fraudulent market activity but rather fraudulent writings concerning market activity. Which is all very confusing.
I think caution should be taken when extrapolating from a single instance of what _appears_ to be a non-truth. The fact that a given firm is making dubious claims does not necessarily imply or play into larger conspiracy themes.
This subject is important. Tens of thousands of employees and investors have lost their entire life savings because of the corporate fraud in the United States. If the corruption isn't stopped, it can happen to you.
Anyone who reads some of the books about the Enron fraud and the WorldCom fraud and the Tyco fraud, will learn that the fraud is accomplished partly by deceptive trading. It is not only the authors of the books who think that Merrill Lynch was involved in deceptive trading; the SEC and FBI think that too, as the links in the grandparent comment, to U.S. government web sites, show.
Look at this quote from the linked article: "Chen Ming-tai, TSE president, said Fubon dealers made the mistake by injecting NT$7.7 billion from one of their international clients [Merrill Lynch] into the market to purchase various stocks issued by 282 companies at the highest prices of the day."
Who selected the 282 companies? If you have read the books about the fraud, it is easy to guess that they were all losing Merrill Lynch investments that the company wanted off its books. That's only a guess, but it is an educated guess, given what has aleady happened. On the other hand, it is not easy to understand some of the deceptions. Sometimes investigators have required months to uncover the sneaky behavior.
Look at this quote from the BBC article linked in the grandparent comment: "A Taiwanese stock brokerage that mistakenly bought $255 [Million U.S. dollars]..." That is more than a quarter of a billion dollars! How is it possible that the financial instruments of 282 companies can be selected by one keystroke error? How is it possible that someone who was "unfamiliar with the company's new computer trading programme" could spend $255,000,000 with a single keystroke error?
A situation has been arranged in which we are not allowed to know the name of the employee who supposedly made the error. My guess is that the employee on whom this is blamed is not aware of any error. That would mean that this could easily be a story invented by his managers.
If you read the books about the frauds, you will read about literally hundreds of deceptive practices such as the one I am suggesting here.
Many people in the U.S. seem to want to be ignorant and stay ignorant about the corruption, as is seen by reading some of the responses to the grandparent comment.