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A $190 Million Misclick for T. Rowe Price (fortune.com)

Posted by EditorDavid on from the whoops! dept.

An anonymous reader writes: This week a court ordered restitution for any investors who'd opposed the 2013 buyout of Dell Inc., approximately $3.87 per share, plus interest. The investment firm T. Rowe Price was a vocal opponent of the deal, and had over 30 million shares scattered throughout its mutual funds. But an automated system at T. Rowe Price used its default setting -- which indicated support for the buyout -- an error which is now estimated to have cost the firm close to $190 million.
Dell won't receive the money "because, in essence, they checked the wrong box," reports Fortune. And the Baltimore Sun adds that the firm now faces the prospect of class action lawsuit from angry investors.

35 comments

  1. they probably saved money by Anonymous Coward · · Score: 0

    Imagine the amount of money they would have had to pay the mutual fund manager to vote the shares instead of having a computer program do it.

    1. Re:they probably saved money by mspohr · · Score: 5, Insightful

      They get paid either way. If the computer does it, they get paid. If they do it, they get paid. If they screw up, they get paid.
      Heads they win, tails you lose.
      T. Rowe Price average expenses 1%
      Vanguard average fees 0.18%
      If you're paying them 1% a year with a gross return that is only 4% then you are paying them 25% of your profit.
      Best to check on those fees before you invest.

      --
      I don't read your sig. Why are you reading mine?
    2. Re:they probably saved money by Anonymous Coward · · Score: 0

      After playing the stock market game for almost a decade with a 60% loss to show for it (gave up in 2008), I switched to vanguard funds, and made it back out of the red a few years ago. Now after 8 years of pumping money into VTSAX, scottrade has decided that the online commissions aint enough and I have to get professional help in order to buy (or sell) that fund.

      I'll be meeting with them this week to ask them to fix this shit. If they don't, I'm transferring it all to vanguard directly, which I should have done 8 years ago since they don't charge commissions on their own funds.

    3. Re: they probably saved money by interstellarsurfer · · Score: 1

      Gave up in 2008? Sounds like you screwed yourself by selling out in the recession. If you had the fortitude to grin and bear it, you would have recovered your losses several times over, rather than once.

  2. No misclick was involved by Anonymous Coward · · Score: 2, Informative

    If it is a preselected option in an automated system used by default, it's not a misclick - rather a badly setup config.

    1. Re: No misclick was involved by Anonymous Coward · · Score: 0

      Worse, this was the predictable and inevitable outcome to firing their IT department and hiring h1b workers who 100% of the time fuckup this way.

      It was an intentional purchase, and literally anyone with a brain could only conclude this outcome.

      They should deal with the $190 million consequences of their purposeful actions like the rest of us have to.

    2. Re: No misclick was involved by Hognoxious · · Score: 1

      hiring h1b workers who 100% of the time fuckup this way.

      The same kind of idiots who turn the background grey?

      --
      Confucius say, "Find worm in apple - bad. Find half a worm - worse."
  3. $190 million? by 110010001000 · · Score: 3, Funny

    They spend that on hookers and blow in a single weekend.

  4. Why would they? by Anonymous Coward · · Score: 5, Insightful

    Dell won't receive the money "because, in essence, they checked the wrong box," reports Fortune.

    Why Dell would be receiving money in any case here? It sounds more like T. Rowe Price won't be getting any money from Dell because of T. Rowe Price's error.

    1. Re:Why would they? by Anonymous Coward · · Score: 3, Funny

      EditorDavid used to work for T. Rowe Price, he's brought his attention to detail to /.

    2. Re: Why would they? by Anonymous Coward · · Score: 0

      Yea I suspect there are some bugs in the summary.

    3. Re: Why would they? by Anonymous Coward · · Score: 0

      Because this is an Editor David article, and he fucks up every article.

    4. Re:Why would they? by silentbozo · · Score: 4, Informative

      AC is correct, the summary should have said that T. Rowe Price is going to miss out because they did not oppose the buyout when it came time to vote.

  5. Why is this Dell's problem? by ilsaloving · · Score: 2

    It's not Dells probably that TRP screwed up. If you're going to set up an automated trading system, you're still responsible if that system screws up. Period.

    It's beyond frustrating that companies like these get a free pass when they make errors that cost millions or billions of dollars. Then again, this is the US, so who am I trying to kid?

    1. Re:Why is this Dell's problem? by Anonymous Coward · · Score: 3, Informative

      RTFA, the summary is wrong and makes no sense. Dell lost the lawsuit to shareholders who voted against the deal for undervaluing shares. TRP is not eligible for the winnings from that lawsuit because their computer made the mistake of voting for it. TRP may be liable to its investors because they are losing out on $190 million due to the computer glitch because without it the company was supposed to vote against the deal and be eligible for the lawsuit money.

    2. Re:Why is this Dell's problem? by Anonymous Coward · · Score: 0

      Didn't you know can pass shit like "oops, takesies backsies" in a court of law?

      Oh wait, you must be a common citizen. Yeah, your livelihood can be gyp'd in a blink and we're still gonna do jack all.

      We'll be forgiving if you did something retarded to cause it yourself though - and by 'forgiving' I mean go from Zero Fucks to subzero.

    3. Re:Why is this Dell's problem? by gzuckier · · Score: 1

      Didn't you know can pass shit like "oops, takesies backsies" in a court of law? Oh wait, you must be a common citizen. Yeah, your livelihood can be gyp'd in a blink and we're still gonna do jack all. We'll be forgiving if you did something retarded to cause it yourself though - and by 'forgiving' I mean go from Zero Fucks to subzero.

      If only the shareholders were able to carry firearms, they could have defended themselves. In the majority of cases, merely brandishing the firearm is sufficient to discourage the management company from robbing the investor blind.

      --
      Star Trek transporters are just 3d printers.
  6. That's a terrible summary by mhkohne · · Score: 4, Informative

    Proper summary:
    The SLP buyout of Dell has been found to be underpriced, and SLP will have to make restitution to those who opposed it.
    TRP doesn't get any of that money because they screwed up and didn't register as opposed to the buyout.

    I've no idea if it's reasonable that SLP has to pay out to those who opposed the buyout.
    It's perfectly reasonable that TRP gets nada, since they screwed up their end of things.

    --
    A thousand pounds of wood moving at 300 feet per minute. Don't get in the way.
  7. missing the point? by convolvatron · · Score: 2

    doesn't anyone find it funny that a firm that moves a lot of money and employs a lot of people finds in necessary to make a bot that always says "yes, approve this buyout"

    1. Re:missing the point? by ATMAvatar · · Score: 2

      Why would we? The computer makes the decisions faster than humans would, and apparently there are no consequences when it doesn't do what the firm wants (or just as likely, when the firm changes its mind afterwards).

      --
      "They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety."
  8. Nobody crying.... by Lumpy · · Score: 2

    Honestly TRP deserves the loss as their kind are pretty scummy. and if someone did not check the settings and they rely on pure automation like that... They absolutely deserve losses of that magnitude and higher.

    --
    Do not look at laser with remaining good eye.
    1. Re:Nobody crying.... by JackieBrown · · Score: 1

      As someone who has half of his retirement funds with them, I say go to hell with your simplistic view that things like this only effect rich people.

  9. Capitalism. by Anonymous Coward · · Score: 0, Insightful

    Go on, dickheads, justify this automated algorithm bullshit. Tell us how it adds liquidity and ensures that humans can optimise their advancement.

    1. Re:Capitalism. by John+Meacham · · Score: 2

      This has nothing to do with trading or algorithms.

      This was a mistake made by their system that handled shareholder votes about corporate buyouts interacting with a lawsuit.

      --
      http://notanumber.net/
    2. Re: Capitalism. by Anonymous Coward · · Score: 0

      What a complete load of shit. Their system does exactly what the operators tell it to do. A trading system isnt capable of making a mistake. It does exactly what the humans in control of it, tell it to do.

    3. Re: Capitalism. by Anonymous Coward · · Score: 0

      > A trading system isnt capable of making a mistake.

      You don't actually *write* any software, do you? Or do you only write Java?

    4. Re: Capitalism. by Anonymous Coward · · Score: 0

      Computers only do exactly as they are told, thus are incapable of making mistakes. All "computer errors" are a result of poor code/configuration or a hardware fuckup.

    5. Re: Capitalism. by jbengt · · Score: 1

      Computers only do exactly as they are told, thus are incapable of making mistakes.

      Great. Then we can all save time and money by getting rid of all the error correction algorithms in software and avoid expensive ECC memory.

  10. How it really happened. by CanadianMacFan · · Score: 1

    It's a good deal for us, let's proceed with it.
    Later on there's more money for people who opposed
    Hey, uh, we had a glitch in our system that made us send in the wrong response.

  11. Ceo by Anonymous Coward · · Score: 0

    This also gets to the fundamental reason why CEOs are over paid. Most shares are owned by institutions and most institutions use the default setting.

  12. Wow, thanks. by Ecuador · · Score: 1

    The summary made no sense at all.
    Also, it seems there seems to be at least one party that bought DELL stock AFTER the announcement, registering an objection to the sale and hoping to get such a settlement if the sale went through. I don't know either whether it is reasonable that SPL has to pay those who were opposed, but it makes no sense to me that they should pay those who bought after there was news of the acquisition attempt.

    --
    Violence is the last refuge of the incompetent. Polar Scope Align for iOS
    1. Re: Wow, thanks. by Anonymous Coward · · Score: 0

      "but it makes no sense to me that they should pay those who bought after there was news of the acquisition attempt."

      Why doesn't that make sense? Those that purchased after the news were taking on the risk that the buyout would not go through, because they felt either the return was good, or would get better via a higher offer. That is why people buy after news of an acquisition offer is released.

      Why is it not fair to pay out to investors that risked their capital on the belief that the company was worth more, and when it came time they opposed the deal since it was lower than the price they believed was fair? Or why is it fair to pay those holding before the news versus those who purchased after?

    2. Re: Wow, thanks. by Anonymous Coward · · Score: 0

      "Those that purchased after the news were taking on the risk that the buyout would not go through, because they felt either the return was good, or would get better via a higher offer."

      But they don't really take on any risk if, whatever happens, they still get paid afterwards by the court, right? And if you read about it it is something that firm has done numerous times, registering their opposition and then getting a payday from the courts. They don't hope for a higher offer to come, they get paid anyway.
      Oh, and the buy was at a 25% premium of the DELL stock price before the rumors started, so I'd be interested to know how it was considered too low and a 50%+ premium was thought "fair".

  13. Someone... by Anonymous Coward · · Score: 0

    Someone misconfigured the auto summary generator at /. and it created a nonsensical article.

  14. Lots of Information Left Out by QlooQl · · Score: 1

    TRP funds as a whole benefited directly from the under priced buyout, or else they wouldn't be liable to the shareholders in their mutual funds who got screwed. It wasn't an "accident". They either: A. Didn't do any due diligence and just blindly agreed or B. They had more funds that would benefit from the buyout than would be hurt by it Proxy voting your shares in a company is simple. You can cast a vote for weeks or even months before the shareholder meeting, and you can also change your vote right up until the cutoff date. There is no "Oops we ticked the wrong box".