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."

Would be nice, but not really...

[KingSkippus]

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.

come on now

[TedCheshireAcad]

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:Would be nice, but not really...

[110010001000]

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!

Use http://www.xe.com/ucc

[FrontalLobe]

C'mon... 1 yen = .83US? Get real... I just ordered 15,000 yen worth of stuff from japan the other day...

1.00 JPY Japan Yen = 0.00829773 USD United States Dollars

Bust those trades

[seniorcoder]

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.

Re:come on now

[0110011001110101]

You mean like this [digg.com] and this [msn.com].

Once again Digg beats /. to the punch, and more accurately all the while.

Re:Data Validation

[Anonymous Coward]

You'd be surprised. I've worked in a number of major banks and those warnings aren't there in a surprising amount of cases.

Re:math check

[NitroWolf]

You could have bought 1 share for $.83, not 610,000 shares for $.0083.
610,000 shares would have cost $506,300 (plus commissions).

Your could have bought 1 share for $.0083, or .83 of 1 cent. This would be $5063.00 dollars for 610,000 shares.

1 yen is .83 of 1 cent, not $0.83. It's $0.0083.

Wasn't $3 billion...and wasn't a typo, either

[dmccarty]

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.

Re:Give them my number

[generic-man]

From Mainichi News [mainichi-msn.co.jp]: "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)

Re:Would be nice, but not really...

[jjapan]

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.

Re:May also not even be true

[jrumney]

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, we receive apology from the Mizuho bond in the same day and night moment. In addition, after the last night, the same company and From Tokyo stock exchange, on occasion, we receive communication such as situation report, but as the contents are reported and the been is. In addition, stock of this corporation has become at this day buying and selling stop, but this makes the market system stabilize For the sake of Tokyo stock exchange to be the measure which is decided concerning buying and selling this day, unintentionally in buying and selling the after the Monday The considering future circumstance, the schedule which it decides is with has received communication, from the same place. In the first value formation process of yesterday, violent fluctuations of this corporation stock price, furthermore very you have been perplexed concerning exerting influence security market to the whole and by the error order which is by the Mizuho bond. Especially appraisal receiving this corporation from before the presentation day, in everyone of the shareholder who has received the application of stock confronting The ? can't help be regrettable, first value of this corporation shape partly due to the fact that it is formed in the form which opposes to the mind of the market. In order in the future, stock price of this corporation early to stabilize in the security market, to be appraised legitimately, the place where it keeps striving to official * being employed member all business it is existence. Furthermore, circulation stocks of this corporation are 3,000 stocks, rewriting the share-holder's list the above that is impossible, it is not something which produces what effect densely the empty, concerning the right of administration of this corporation. In addition, we have entrusted to Tokyo stock exchange circulation stocks from here concerning the correspondence to buying and selling the stock above. December 9th of 2005 Yasushi Okamoto J-Com corporation Chief Executive Officer

Re:You've got to admire the Mizuho execs...

[EmoryBrighton]

I have to wonder how a U.S. bank would have handled such a mistake?

Did you read the article? First of all it was not a bank.
Second, they sold 41 times the available shares! Everyone was horrified and started selling their stock from ALL of the trading companies. (akin to selling your stock from etrade, ameritrade, when in fact Scottrade was to blame)

to wit: http://business.timesonline.co.uk/article/0,,9063- 1917963,00.html

The sell trade - when he had intended to sell just one share, for 610,000 yen - represented an offer to sell a staggering 41 times the amount of shares in the company that were actually available to the entire market.

In the ensuing confusion, shares in J-Com initially tumbled as the market tried to identify the source of the trading error. Concern about possible mistakes at trading houses with lax risk controls sent banking stocks diving and then hit the wider Tokyo market.

It was initially unclear which firm had sparked the frenzied selling, with Mizuho Securities only admitted to being behind the order after the Asian markets closed at the end of trading.

not to menion the headline is an outright lie. The company lost 224 Million Dollars. The 3 billion dollars "LOST" were due to the stock market frenzy of selling. Maybe next headline will read: Day of trading cost the us economy 12 billion dollars as stocks fell.

So many errors, so little time ...

[gordguide]

" ... 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).

Discounted bbuyers refusing to sell back

[iambarry]

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.

$224 million.

[mwillems]

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.

Slashdot posting error leads to...

[podperson]

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.

Re:Would be nice, but not really...

[mythosaz]

Sir, you're mistaken.

Windows doesn't just randomly switch focus to other windows. You might have some program that is set to take focus (my VPN software will pop itself into the foreground), but the Explorer shell of windows does no such thing as you describe.

The behavior you describe "dialogs flashing wildly" is probably caused by something less sinister -- a bad keyboard. It's fairly common to have a stuck CTRL or ALT key, or a keyboard driver that has failed to recognize that the CTRL or ALT key is depressed, that will cause exactly the behavior you describe.

Also, feel free to write your own windows manager. Replacing explorer is, honestly, pretty trivial. You can replace it with any executable you want -- and making one that launches other programs is a fairly simple windows programming excercise.

Finally, if you do write your own windows manager - I assure you, I won't be using it, because, three seconds of typing or not, there are certainly times that something should appear in the foreground - and might even require focus.

fix

[Spy Hunter]

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.