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The 3 Billion Dollar Typo
Rand310 writes "Mizuho, the world's second largest bank based in Japan, with total assets of nearly the GDP of France (around 1.2 trillion USD) accidentally sold 610,000 shares, valued at $3.1 billion... for 1 yen each. A 27 billion yen loss would almost match Mizuho Securities' group net profit of 28.1 billion yen for the financial year ended in March, though... the incident would not threaten the brokerage's financial stability. FYI 1 yen is about .83 cents. Yesterday one share was selling at $5,065, today you could theoretically have bought 610,000 shares for $.0083 each. An expensive switch of variables."
No, the shares weren't actually sold for 1 yen each. From TFA:
Selling the shares for 572,000 yen is where the 27 billion yen figure came from, not selling them for 1 yen.
Also...
Aside from the fact that you couldn't have theoretically bought the shares because of market safeguards already mentioned, that sentence is missing a very important word: 610,000 shares for $.0083 each.
Still, it would have been one helluva holiday sale, wouldn't it?
The other thing I thought was interesting was from the other article. It said:
How much yen do you want to bet that it's one of those stupid "Are you sure?" dialog boxes that everyone clicks "Yes" to without actually thinking about what it's asking? Ah, how I love ignoring those warnings, too.
From TFA: No buyer was actually able to pick up the phantom shares for 1 yen due to market rules designed to limit price fluctuations...
i love sensational media.
I wonder how many times the person(s) hit "Yes I am sure" when the system was telling them not to do it...
From TFA..... No buyer was actually able to pick up the phantom shares for 1 yen due to market rules designed to limit price fluctuations, but the shares may have gone as cheaply as 572,000 yen ($4,750) each, a more than 9 percent discount to the intended sale price. ....
Mizuho's error has so far cost the broker some 27 billion yen ($224 million), Fukuda estimated.
It appears that, in fact, they didn't lose BILLIONS but a few millions. Still large, but the post is misleading.
Surely there was some kind of trigger in the software that would detect these kind of errors! Windows asks if im sure when I try to delete a file and even then it only sends to to the recyle bin!
When you think about it, all these investment banks do is take nothing, divide it up, sell it, and make a huge amount of profit on the hard work of entrepreneurs. Mizuho will no doubt be forced to pay back the difference to J-Com, but that's too late, really. Some lucky souls bought in at that low price and made up to 500,000% profit on the error.
So much capital floating around based on the creation of nothing. Is there a more apt description of the modern world?
Jesus saved me from my past. He can save you as well.
FTFA "The sell order, which was more than the available shares, somehow went through the TSE system.
That to me is much more disturbing.
I just wonder who's going to get the blame, IT or the software vendor?
http://www.maxineudall.com/2010/02/should-economists-be-sued-for-malpractice.html
Still, it's pretty wild that something like this even happened at all. With all the safeguards, and all the people supposed to be watching this type of activity... NO ONE caught it? A lot of people are going to lose their jobs over this one. Luckily they didn't really sell them for 1 yen each. Imagine how hard their market would've taken a fall then?
Im curious how this is going to effect the business itself.
if I were able to see further, it was because I stood on the shoulders of Giants -Newton
As someone else pointed out Not On Slashdot, something like this has been reported before. 4 years before, in fact. Note that the number & price of the shares in each report are 610,000 shares at 1 yen each.
Now, what do you think that chances of this happening twice are? Yeah, that's what I thought.
The company made a horrendous mistake and yet, there you see two executives bowing apologetically and taking responsibility on the day it happened .
I have to wonder how a U.S. bank would have handled such a mistake?
I'm not tense. I'm just terribly, terribly, alert.
Most exchanges will call the members who have accidentally benefited from another member's mistake and ask them politely to agree to void the deal. Although not obligated to do so, most brokerages typically honor this request as they have to assume that they will be the next ones to make a mistake.
Um, the summary says 1 yen is worth ".83 cents", which is just about .0082977 USD...congrats on proving the summary correct when you were trying to prove it wrong :P
Monstar L
>>I wonder which online deal site this was posted on first?
FuckedCompany.com
A few weeks ago I engaged in some slightly complicated stock transactions, where I sold a company short then issued an order to buy it back if it rose to a certain price (in case it rose unexpectedly). Before I punched the "confirm" button I spent rather a long time making sure that I was saying "Only buy it when it hits that price" not "Offer to buy it at that price", which would have resulted in a huge loss for me.
This guy's problem was presumably different; he knew what the forms meant but entered the wrong numbers. Still, it's kind of scary to be looking at a computer screen and thinking, "I hope this is right, or it's REALLY gonna suck."
You could have bought 1 share for $.83, not 610,000 shares for $.0083.
.83 of 1 cent. This would be $5063.00 dollars for 610,000 shares.
.83 of 1 cent, not $0.83. It's $0.0083.
610,000 shares would have cost $506,300 (plus commissions).
Your could have bought 1 share for $.0083, or
1 yen is
I can only assume that this was done by an employee who gave their two weeks notice, and was not immediately escorted to the front door.
For anyont who RTFA'd, 610,000 shares at 1Y were offered, not bought. The error so far has cost about $224 million, and may eventually cost $250 million. That's a huge cost for a trader error, but it's not $3 billion.
And I don't think this qualifies as a typo. How about "data entry error"? Or how about software bug, since the number of shares sold was more than the number of available shares.
Have fun: Join D.N.A. (National Dyslexics Association)
Congratulations, you may have what it takes to be an editor here.
Why was this not on SlickDeals...this would have been the slickest deal of the century!
In addition to a Megabytes -> Library of congresses conversion, we now have a conversion of Frances to USD. I make 4.5833e-8 Frances last year!
From Mainichi News: "The accidental order was 42 times bigger than the number of issued shares, but a computer warning of the misplaced order was overlooked." (emphasis mine)
For more information, click here.
A Lehmann Brothers trader keyed in a £300m sell instead of £3m in 2001 and cost the company £20,000 (in fines, cos he moved the FTSE downwards with such a large sell order).
And a Bear Stearns employee typed in $4bn instead of $4m in 2002, again moving the index (thsi time the Dow Jones) down.
Mostly though these positions are unwound by agreement between the parties. I don't understand why that didn't apply here.
.
They will never know the simple pleasure of a monkey knife fight
I'd be really curious to know how something so dramatic could possibly be written with a "check" that could be ignored with trivial effort or due to plain inattention. Yes, it's human nature to ignore "Confirm" dialogs, and efforts to explain things to the user within the standard Windows API so often end up like the "Do you really want to save this as a CSV" dialogs in Excel. But c'mon -- no single point of failure should result in something like this happening.
There has to be an escalation process in place to bounce serious problems up a review tree for others to scope out. You'd think bankers, of all people, would demand that from their software. I can't even post a news item on our intranet without legal reviewing it, for goodness' sake.
"Fundamentalism" isn't about divine morality. It's about human authority.
I know that obnoxious "Are you sure?" messages are just a bloody nuisance, but maybe a kind of "smart" version would be good.
In this case, it would spot that you were about to do something *very* odd, and print:
"Are you sure?"
'Y'
"Are you *really* sure?"
'Y'
"Ok, so what are you so sure you want to do?"
'... uhm'
Then why are you still here?
You know, all of the people posting on Slashdot about how "Digg is the future" are completely full of shit (not just singling you out Bombadier Beetle). What you seem to fail to realize (or, more likely, do realize and ignore in the hopes of someone responding to your troll [congrats! I'm responding :)]) is that the two sites serve genereally opposite purposes even though they are, technically, both tech-related sites. Slashdot is about having an in-depth conversation with peers and a chance to hear others take on the matter at hand. Digg is about seeing what hits the front page with high diggs and deciding "Do I want to read this story or not?" with, basically, no discussion.
Now please go troll somewhere else - Slashdot has enough of them as it is. I hear that Digg is looking for more so go play in their yard.
PS - I have Digg as one of my home pages on Firefox so I do check/read both sites so please no flames about "You don't know what you're talking about since you obviously don't dig Digg!"
Dream as if you'll live forever.
Live as if you'll die tomorrow.
~Anonymous~
" ... accidentally sold 610,000 shares, valued at $3.1 billion ... for 1 yen each. ..."
... A 27 billion yen loss ..."
... FYI 1 yen is about .83 cents. ..."
... today you could theoretically have bought 610,000 shares for $.0083. ..."
;-).
No, they didn't.
"
Huh? Nobody lost, or "won", anything. There were no trades at that price.
"
This one, despite other posts to the contrary, is about right (today's rate is 0.00841 to the USD, or 0.841 yen = 1 cent). Considering the math proficiencey demonstrated so far, I'd give him a "close is good enough" checkmark on this question, to avoid the embarassing, and apparently inevitable, goose egg on his math final.
"
No you couldn't. And even if you could, you couldn't.
The company doesn't have 600 thousand shares outstanding to sell, for one thing; share owners must agree to sell at that price for another.
Pity the poor bastard who made a sell order "at market", though
Market rules prohibited the trade from being completed, for another. And that's about $0.0083 per share, it would have cost you about $US 5130.10 plus brokerage fees at today's exchange rate.
The short answer here, for those of you whose heads are exploding from the bad, bad Math and English Composition at work here, is some trader placed an order for one share, valued at around $5K, and made a mistake somehow.
Instead of an offer of one share for that price, the order was entered as 610,000 shares for the price of one share. As it turns out, some shares were sold at a discount of 9% (ie $US 4,750 per share; ie some owners were willing to make a sell order "at market" ) because the market rules allowed that much of a price drop before trading restrictions or outright halts kicked in (the news stories don't say what the mechanism for price monitoring is or does, but obviously, it works).
Whats really costing them is that they are obligated to buy back the shares because they don't have what they sold.
As they sold far in advance of the number of outstanding shares, their in a bind.
According to TFA, the shares all sold for about $4,750. They where initially trading at about $5,065. Multiply the difference by 610,000 shares, and you have a loss of about $190 Million.
Problem is that they have to settle by December 13th. The Tokyo Stock Exchange will not allow them to simply pay the differnce of $315 per share to the buyers.
The current share holders, understanding the situation, see annother big payday. They can ask for any price they want, Mizuho must purchase 610,000 shares by December 13th, and there's only about 15,000 shares outstanding.
They have to buy shares, distribute them to those that bought them through the error. Then, they have to buy those back, to give to other buyers. Then they have to repeat about 40times.
Seems to me that the Tokyo Stock Exchange should just rule that it was an error, and make Mizuho pay $315 for each share erroneously sold.
So it seems they are using Windows. I think it's quite common to overlook all warnings after working with Windows for some time.
Yet Anotehr Slasdhot Page View Generator. Brilliant! Instead of quoting exchange rates based on the unit denomination of the two countries (as is customary), quote them using one of either country's smaller denominations. In this case, US pennies. You only need one person to misread it and think that the exchange rate has a misplaced decimal. If it will make you feel any better, I almost fell for this myself. I've said it before and I'll say it again, errors on /. stories aren't mistakes. They're pure pageview generating genius! Hats off.
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
The accidental order was 42 times bigger than the number of issued shares, but a computer warning of the misplaced order was overlooked
Guess that rules out coicidence.
Somewhere, something incredible is waiting to be known. -- Carl Sagan
CNN reports http://edition.cnn.com/2005/BUSINESS/12/09/mizuho. error.main.reut/index.html /. on this if you don't mind.
that the error cost "up to $224 million". I prefer to trust CNN to
---
BDOS ERR ON A:>
And I'm pretty sure someone did panic...
From TFA:
"No buyer was actually able to pick up the phantom shares for 1 yen due to market rules designed to limit price fluctuations, but the shares may have gone as cheaply as 572,000 yen ($4,750) each, a more than 9 percent discount to the intended sale price."
So the headline is wrong and/or the poster did not RTDA.
This can't happen in the NASDAQ market. There is a "clearly erroneous" rule, which allows trades made due to computer error (operator-caused or programmer-caused doesn't matter). Basically, a transaction at a "clearly erroneous" price can be un-done ("busted").
To operate a computer-based market without such a protection in place is pretty reckless.
What I hate even more (yes, Microsoft I'm talking to YOU) is that "OK" and "Cancel" are not synonymous with "Yes" and "No".
It's just stupid. Or even worse is the 7 (or so) lines of text Paint Shop Pro gives you describing the effects of leaving lots of data on the clipboard before you exit the program, followed by "Yes" and "No" buttons. I have to read the damn thing every time because I can't recall if it asks you to leave the data on the clipboard or delete it...
How about naming the buttons "Leave on Clipboard" or "Delete" so I don't have to wade through several lines of text when I already know what you're frickin' asking, but can't remember how you worded the sentence.
I think programmers too lazy to write message boxes with buttons other than "OK" and "Cancel" are just another reason why I'm convinced most software developers (especially at Microsoft) simply hate users. Microsoft gives you an error message, "You can't do X unless you do Y." If they cared, you could press a button on the message box to do Y, or at least being up the Y dialog (which is buried in some arbitrary configuration area that randoomly changes every time there's a new version of Windows, but that would require 1.) The high school interns who implement Windows UI to get off the foozball table and 2.) Microsoft to have something other than complete indifference if not outright hostility to the people who use their software. It'll never happen.
That and small dialog boxes with long lists that can't be resized. There's a special circle of Hell for people that do that and there's already a whole section roped off just for MS.
Of course, everything started going to hell when "chrome" began to be equated with "usability" about 8-10 years ago... and now every hack who's barely literate with Photoshop considers himself (and worse, IS considered) a usability expert.
Most UI is no better than it was in 1990, and any good ideas we've seen since then were probably on the NeXT or even on the Xerox PARC software. Extrapolating Windows Media Player to the year 2010, the actual viewable size of the screen will be the size of postage stamp, and there will be 31 different skins to let you make it look like different parts of the body and full-screen view will have ad banners on the top and bottom. But that's just a guess...
You are in a maze of twisty little passages, all alike.
In Warlords II (not to be confused with Warcraft II) if you choose to resign a game you have two options, Graciously or Ungraciously.
If you resign Ungraciously all your cities are razed. They are out of play and none of the remaining players can benefit from them.
If you select Graciously you are asked, "graciously?"
Clicking anywhere makes that box go away and another appears asking, "GRACIOUSLY?"
Clicking again brings a third box with, "GRACIOUSLY??????"
Another click brings up the last box, which says, "I don't think so. I'm going to burn them all anyway."
One more click takes you back to the map with all your newly razed cities.
Exam 4/C again. Maybe I'll do better this time.
Buys instead of sells. Sells instead of buys.
Most traders make a few mistakes a week - but they catch them in seconds and back out the position. It's the ones that are made and not noticed for weeks that cost the real money.
It's part of the game - the risk a trader takes. When you find the error, you fix it by going the opposite direction immediately and then forget about it - Like Tiger woods at the next tee after he misses a 3ft put.
It can be *really* entertaining though! I once watched a lady melt down when she realized 20 minutes after the market closed that she had not sold 100 shares of a blue chip stock, she had types in the 12 digit account number and the firm was on the short side of a multi-hundred-million dollar trade.
Flip a coin... She lost the company only $80,000 as it was covered at 9:30 am the next morning and it could have just as easily been a brilliantly profitable trade.
THis is always there - you'd think $250 Million would buy a company a good set of electronic surveilance systems to identify outliers which just seem odd ('why is our guy selling this 610,000 yuan stock at 1yuan?!' says the comp in a split second). But there will *always* be human error.
Torontoman
Actually, 1 yen is closer to 83% of one cent, not 83 cents. I also like mooses.
Instead of pressing the "reboot later" button on those windows, you grab the very top left portion of the title bar and drag them down past the clock in the lower right so they are entirely off the screen except for a few pixels. No more will pop up as long as one is still open.
main(c,r){for(r=32;r;) printf(++c>31?c=!r--,"\n":c<r?" ":~c&r?" `":" #");}
PS - I have Digg as one of my home pages on Firefox so I do check/read both sites so please no flames about "You don't know what you're talking about since you obviously don't dig Digg!"
:-)
You don't know what you're talking about since you're obviously both a Slashdot fanboy and a Digg fanboy!
Choose a side, traitor!