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Businesses The Almighty Buck

The 3 Billion Dollar Typo 398

Posted by Zonk
from the this-is-why-coffee-is-a-daily-requirement dept.
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."
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The 3 Billion Dollar Typo

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  • by KingSkippus (799657) * on Friday December 09, 2005 @12:10PM (#14220116) Homepage Journal

    No, the shares weren't actually sold for 1 yen each. 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.

    Selling the shares for 572,000 yen is where the 27 billion yen figure came from, not selling them for 1 yen.

    Also...

    ...you could theoretically have bought 610,000 shares for $.0083.

    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:

    The accidental order was 42 times bigger than the number of issued shares, but a computer warning of the misplaced order was overlooked.

    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.

    • by 110010001000 (697113) on Friday December 09, 2005 @12:15PM (#14220171) Homepage Journal
      Yes, but if Slashdot was more accurate it would be less dramatic. The idea is to increase pageviews by posting hyped and controversial "stories" in order to increase revenue. This was probably a policy instituted by upper management to help the flagging LNUX (Slashdots parent company) stock price.

      Haven't you noticed that as the stock price goes down, the hysteria on the front page goes up? Anything to make a buck!
    • by 91degrees (207121) on Friday December 09, 2005 @12:17PM (#14220195) Journal
      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.

      It's a constant grip of mine. I hate unneccesary confirmation dialogs (the result being I hate alost all of them). I can just about tolerate "This will overwrite a file", or "Save before quit" ones, but I keep running across designers who think insist on using modal dialogs for feedback. "You have just pressed a key. OK/Cancel". I make a point of querying this behaviour any time a designer comes up with it.
      • by jjapan (937552) on Friday December 09, 2005 @12:49PM (#14220555)
        Actually the message box is rather large and declares the error very clearly. In addition it shows the details of what the action will do. Whoever did this really was either not watching or was using the safety net to enable some friends to make a killing. The news here interviewed day traders who made a lot of money on this deal. The blip lasted for about 3 minutes and was jumped on very quickly. The day traders referred to it as a "Christmas present". Investigation going on now. Be interesting to see what turns up.
        • It's not about displaying this error. It's about displaying non errors. If you see too many dialogue boxes then they lose their significance, and people get lazy and click through them without reading them. I know I don't. I even had to close a window to find out what the buttons said when you do that. This is just human nature. UI design needs to cope with human nature.
          • by qray (805206) on Friday December 09, 2005 @03:08PM (#14221956)
            What I really hate is the way Windows allows a background application to interrupt a foreground application. I'm happily typing on along in my favorite editor when something hidden demands attention via a message box. Unfortunately that time I'm typing and I often hit a key that maps to a button or otherwise dismisses the dialog. Leaving me wondering what the heck did I just answer.

            Was it asking, "Would you like to format your hard drive?" or "Press OK to transfer all your bank account funds to Joe Smith.".

            This has been a problem for ages on Windows, and I can't believe they have yet to address it. A simple fix would be to create a brief quiet period that would allow the user to react and stop typing and respond.
            --
            Q
        • Actually the message box is rather large and declares the error very clearly. In addition it shows the details of what the action will do.

          It does not matter how large or explicit the warning box was. If every large transaction got the same verificaton box re-stating the terms of the trade (and I suspect this is the case) the warning was useless because it will be ignored 999 times out of 1,000. Only if warning or confirmation boxes appear infrequently, when certain parameters are exceeded, will they be
      • by maxwell demon (590494) on Friday December 09, 2005 @12:53PM (#14220604) Journal
        Are you sure you wanted
        to press the "Ok" button
        on the "Are you sure"
        dialog box?

          [ OK ]    [ Cancel ]
        • by bleckywelcky (518520) on Friday December 09, 2005 @08:06PM (#14224832)
          And besides that, you have me wondering whether I should answer "OK" or "Cancel" to a question that is asking for a "Yes" or "No" answer.

          Seriously, wtf does "OK" mean in response to the question "Are you sure you want to take this action?" What if you went to the grocery store and the clerk asked if you needed help carrying your bags to your car and you responded "Cancel" ... they would be like wtf?
      • Apply - "Do you really want to apply these changes? Yes/No"

        No. I went into the property pages for fun, made modifications because I was bored, then hit Apply by accident.

        Yes of COURSE I want to make the changes you stupid software, argh!
      • by Anopheles (43442) on Friday December 09, 2005 @02:33PM (#14221588) Homepage Journal
        The ones that REALLY piss me off are the ones for Windows patches. If you install an update that "requires" a reboot, and you hit "reboot later", it will nag you (by popping up another modal box with the same question) every 3 minutes. And there's no "cancel" or "stop annoying me" button. You can't stop the nagging.

        What's worse is that the default button on this dialog box is the "Reboot now" button.

        So I'll be typing in an email or a posting to something, and after 3 minutes are up, it will suddenly pop up the nagbox into the foreground, just in time for me to hit spacebar after finishing a word. In a blink of an eye, the computer forces every program to end without prompting to save and reboots...

        I can understand and can live with crashes. but that... That behavior was PLANNED.
        • Windows steals focus from me all the time. I can't count how many times I'll be typing in an email (or on a web page like /.) when suddenly I'm somewhere else and windows and dialogs are flashing wildly. Another pet peeve is entering keys for Microsoft products. I'm concentrating on reading the key and typing on the keyboard, then when I look up I discover I have to type the whole thing all over again because something stole the freaking focus while I was typing.

          If I were to write a Window Manager, any prog
        • fix (Score:3, Informative)

          by Spy Hunter (317220) *
          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.
    • by Anonymous Coward
      As someone else pointed out Not On Slashdot, something like this has been reported before. [ncl.ac.uk] 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.
      • In fact if you start digging, Jupiter Communications (J:COM) has been listed on JASDAQ for some time, so if it was listing on TSE, it would be a transfer between exchanges, not an IPO. CNN and Reuters really need to check their urban myths a bit better before running with them.
      • 16 shares at 610,000 each transposed to 610,000 shares at 16 yen each in the original.
        Today's story is 1/610,000 ; still, very suspicious, but we'll see.

      • The event is genuine. There's a press release from the company itself (in Japanese) here [jcm.co.jp].

        Here is Google's not particularly good Japanese (BETA) translation:

        By the error order of this corporation stock which is by the Mizuho bond December 8th of 2005, this corporation shareholder * investor and the security market have caused confusion concerning the case to which, as this corporation to everyone of the shareholder * investor thinking very much, regrettably the ? it increases. At this corporation, w

    • Regardless of the numbers I'm sure someone, somewhere, is going to get their head handed to them on a platter. A bank's reputation alone is priceless. I suddenly don't feel so bad about the times I've overpaid $50 or so for things in the past.
    • by fossa (212602) <pat7 @ g m x . net> on Friday December 09, 2005 @12:37PM (#14220403) Journal

      Yup. As others have pointed out, this is yet another usability problem. If one simply mistake can cause so much damage, then it should raise a warning flag. Which it did, but apparently the warning flag was utterly useless. Silly "ok/cancel" dialogs are not enough to cause the user to stop and think about what he is doing. If such dialogs were correctly implemented, they would be extremely annoying which would lead to two things: 1) it'd be much more unlikely to make a mistake and 2) as another poster pointed out, almost *all* such dialogs are for something minor (do you really want to quit??) and better safeguarded against in some other way (e.g. "undo"), and thus would [hopefully] quickly disappear if they must be extremely annoying rather than merely annoying.

      Raskin's suggestion for a dialog that would work is something like: "You are about to perform dangerous and undoable action X. If you wish to proceed, type 'Yes, perform action X' followed by the [11th] word of this sentance." You'd be asked to type a different word each time so you could not memorize it and learn to confirm the action without thinking. Highly obnoxious, yes. Hopefully designers would learn to only make use of it when absolutely necessary.

      P.S. I'd just like to say that Firefox without the SessionSaver extension is painful. Why on earth isn't SessionSaver included by default? "You have 9 tabs open that took you many hours to arrange. Close them all forever: yes/no?". And if something crashes, you don't even get the annoying dialog...

    • 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 think it goes to show that the "Are you sure?" dialog boxes are not the safeguard answer that everyone seems to think it is. How many developers I know say: "oh, we just need a confirmation here." Yeah, so much for that.

      The answer, IMO, is UNDO. That should've been a separate key on the keybo

    • It appears the mice have finished reconstructing the question. Since this version of the Earth has now fulfilled its purpose, is it time to make way for the intergalactic highway? And, uh... can I get a ride offa here?
    • Yup you're right there. Another interesting part of the article:
      "The new J-Com shares had a starting price of 672,000 yen, but after the misplaced order they fell to the day's trading limit of 572,000 yen each. After Mizuho Securities Co. bought back the shares, they rose to the maximum allowable single day gain of 700,000 yen."

      If you had been able to get any at 572k yen you would have made a 128,000 yen/share profit, not bad!

  • come on now (Score:2, Informative)

    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.
    • Re:come on now (Score:3, Interesting)

      by krbvroc1 (725200)
      They are using the RIAA math. Theoretical sales * retail price equals large sensational media.

      The real gist of the article is this was an IPO, that there was a typo, nothing actually sold that low, but the confusion caused by the low prices probably deflated the opening day IPO pricing--therefore the firm is trying to buy back what did sell so they can fix things. The buyback costs could be around $224m.

  • I thought you said $0.83 each, as in per share. So how could you, then, purchase 610,000 shares for $0.0083?
    • No it said ".83 cents". 0.83 cents != 83.00 cents. .83 cents == 0.0083 dollars. Where the decimal point is matters ;-)

      But yeah I took a double take on that as well. I knew the US$ wasn't doing great, but I knew it wasn't doing that bad ;-) Certainly wasn't as clear as it could have been, but then it's a /. summary, so clarity is penalized.
    • It doesn't say "$0.83," it says "0.83 cents," also known as $0.0083.

      It would make life easier if the freaking cent sign worked on here. You can use &euro and &pound, but God forbid I use &cent or try the ASCII code.


      £
        and a whole lot of nothing
  • Data Validation (Score:5, Insightful)

    by ||Plazm|| (76138) on Friday December 09, 2005 @12:12PM (#14220132)
    I wonder how many times the person(s) hit "Yes I am sure" when the system was telling them not to do it...
  • by LordPhantom (763327) on Friday December 09, 2005 @12:12PM (#14220137)
    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.
  • Error prevention? (Score:3, Insightful)

    by D-Cypell (446534) on Friday December 09, 2005 @12:14PM (#14220156)
    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!

    • The article states that there was a check, but that it got ignored.

      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 someth

    • by vertinox (846076) on Friday December 09, 2005 @12:55PM (#14220625)
      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.
  • 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?
    • They're leveraging dynamic potentials of the various vertical markets in order to create a strategy of diversifying assets across a wide technology base.

      Seems simple enough to me :-)

      This is the same with taxes though.

      I get paid $1. 22 cents goes to income tax. 15% of the remaining goes to provicial/sales tax, leaving me with 66 cents. Then the thing I bought goes to someones salary, but they only get 51 of the 66 cents. Then they buy something upto a value of 43.9 cents.

      So after only one level of indire
    • by Fnkmaster (89084)
      If these people create nothing of value, then why are people willing to pay them for it? This makes no sense from a basic economic perspective - if there are no gains from trade, why is trade occurring? Now you could try to argue that there are a small number of suppliers that engage in cartel price fixing, but that's hard to buy, there are many boutique investment banks and the like, and none of their services are cheap.

      There is a reason for this. Entrepreneurs and executives *need* access to capital ma
  • by mpapet (761907) on Friday December 09, 2005 @12:15PM (#14220164) Homepage
    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?

    • It'll be classified as a software glitch and nobody will have to account for it. After all, software is perpetually in beta, just read the EULAs.

      Refinery blows up? The software was faulty. Good luck assigning resposibility these days -everyone has an "out" by blaming Windows or some hard-to-find obscure programmer.
    • FTFA "The sell order, which was more than the available shares, somehow went through the TSE system.

      That to me is much more disturbing.

      Only government gets to make money out of thin air just by printing more :)
  • Wild. (Score:2, Interesting)

    by CronicBurn (316845)
    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.

  • by The Angry Mick (632931) on Friday December 09, 2005 @12:18PM (#14220214) Homepage

    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?

    • by Valiss (463641) on Friday December 09, 2005 @12:34PM (#14220381) Homepage
      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?


      Well, I can tell you it wouldn't be the company execs who would be bending over...
    • Interesting observation. I have to say that US execs/CEOS, by comparison, act like spoiled little children...they deny responsibility, take as much as they can get away with, constantly inflate their worth (read, delusional - what is so magic about a CEO that the salary has to keep climbing in proportion to the amount everyone else in the company is paid?), etc.

      "Look Ma! I led a company into a miserable state, fired 3,000 employees because of it, and gave myself a 10% raise! Wow I must be good!"
      • by xenocide2 (231786) on Friday December 09, 2005 @12:53PM (#14220597) Homepage
        The difference is that when a US exec screws up at this magnitude, reguardless of how much apologizing happens, they will be canned in the very near future. They also will face a very likely suit in court for defrauding investors. In Japan, it seems businessmen apologize for everything, yet very little gets fixed. I guess I'd understand the culture more if I lived there for long enough, but it seems a bit strange to me.

        Don't take this as a defense of American corporate ethos, or a criticism of Japanese ones, though. The two countries simply have different Zeitgeists. For whatever reasons the massive conglomerates that dominate Japan are never upset by newer competition. What I've yet to discover, is whether the privitization of Japan Post is a signal that the day of ruling families is over, or whether it's a signal that the government will no longer compete with them.
    • I live in Japan, and as I have noticed, this is the custom. Even if a Japanese individual isn't personally responsible for an error, he will do his best to apologize and make amends if he was involved. It's very unlike the modern Western legal client, where people are paranoid of being held liable for mistakes.
    • I'll bet there were some chairs thrown and people screaming at the "Progammers! Programmers! Programmers!" whose software will no doubt be blamed in screw up. Then the executives straightened up their ties and came out for the press conference. I doubt it matters what country you did it in, some mistakes are simply to big to hide. $200 million is lost. Somebody's getting fired. It would be a lot harder to cover this up and make the numbers still add up right, than it would be to pick someone to blame and wr
  • The only reason this is amusing is that nothing came of it. It makes a scary headline, encourages ill-informed comments about an overseas financial system (bonus points: the currency is an awkward one to mentally associate with dollars or euros, etc), and (to the average reader) somehow makes technology people look bad. This was just a silly thing to report, period.
  • Bust those trades (Score:5, Informative)

    by seniorcoder (586717) on Friday December 09, 2005 @12:19PM (#14220224)
    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.
  • So what are we to actually learn from this article?
    That the Japanese actually make typos from time to time?
  • It's pretty brilliant. What it does is where there's a bank transaction, and the interests are computed in the thousands a day in fractions of a cent, which it usually rounds off. What this does is it takes those remainders and puts it into your account.
    • Um, I'm gonna need you go ahead and come in tomorrow. So if you could be here around nine, that would be great.

      Oh, yeah I forgot. I'm gonna also need you to come in Sunday too. We, uh, lost some people this week and we need to sorta catch up.

      Thanks!
  • Scary forms (Score:4, Interesting)

    by jfengel (409917) on Friday December 09, 2005 @12:27PM (#14220307) Homepage Journal
    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."
  • 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.
  • by dmccarty (152630) on Friday December 09, 2005 @12:30PM (#14220340)
    Apparently not even the submitters are reading the articles these days...oh well.

    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.

  • by Anonymous Coward
    Why was this not on SlickDeals...this would have been the slickest deal of the century!
  • by Lord_Slepnir (585350) on Friday December 09, 2005 @12:33PM (#14220379) Journal
    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!
  • by The Grassy Knoll (112931) on Friday December 09, 2005 @12:34PM (#14220386) Homepage
    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.

    .
  • by gordguide (307383) on Friday December 09, 2005 @01:07PM (#14220737)
    " ... accidentally sold 610,000 shares, valued at $3.1 billion ... for 1 yen each. ..."
    No, they didn't.

    " ... A 27 billion yen loss ..."
    Huh? Nobody lost, or "won", anything. There were no trades at that price.

    " ... FYI 1 yen is about .83 cents. ..."
    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.

    " ... today you could theoretically have bought 610,000 shares for $.0083. ..."
    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).
  • $224 million. (Score:3, Informative)

    by mwillems (266506) on Friday December 09, 2005 @01:56PM (#14221210) Homepage
    CNN reports http://edition.cnn.com/2005/BUSINESS/12/09/mizuho. error.main.reut/index.html [cnn.com]
    that the error cost "up to $224 million". I prefer to trust CNN to /. on this if you don't mind.

  • by podperson (592944) on Friday December 09, 2005 @02:15PM (#14221397) Homepage
    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.
  • by treat (84622) on Friday December 09, 2005 @02:27PM (#14221526)
    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.

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