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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.
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.
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
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.
>>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."
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.
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 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'
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!
He was holding down the shift key.
"I am the king of the Romans, and am superior to rules of grammar!"
-Sigismund, Holy Roman Emperor (1368-1437)
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).
So it seems they are using Windows. I think it's quite common to overlook all warnings after working with Windows for some time.
And I'm pretty sure someone did panic...