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Saturday, December 10, 2005

The $298 million typo.

Mizuho Financial, Japan's second-biggest bank, said a typing error at its brokerage arm cost it at least 27 billion yen ($298 million)...

Mizuho's brokerage wrongly put an order to sell 610,000 shares for 1 each. It had intended to sell one share for 610,000...
[Bloomberg]
A little more detail, for those of us who enjoy the suffering of others...
... the Tokyo Stock Exchange is trying to prevent the brokerage from reneging on the transaction, TSE officials said Friday...

Due to a data entry mistake, Mizuho Securities placed an erroneous order Thursday morning to sell 610,000 shares of J-Com for 1 yen, instead of one share for 610,000 yen, during [J-Com's] debut on the TSE's startup market.

Since the size of the order is 42 times larger than J-Com's 14,500 outstanding shares, it was effectively a massive short-sell order and must be settled by delivery of the shares on the fourth market day from the order's placement. The order remained valid as of Friday...
Talk about cornering yourself in the market!

Morgan Stanley Japan reported to the Finance Ministry the same day that it acquired a 31.19 percent stake in J-Com Co. ... the U.S.-affiliated brokerage bought 4,522 J-Com shares Thursday when the recruitment agency went public on the Mothers market.

It is also believed that many individual investors, including day traders, jumped on the bandwagon and bought J-Com shares after the erroneous order was placed...

Sure, at one yen per share -- less than a US penny -- why not buy?
[The TSE is considering imposing a "forced settlement"] to set a certain price for a J-Com share that is higher than the investors' purchasing price and forcibly settle the deal by paying investors in cash ... -- the first such action in 55 years -- to preserve trust in the stock market.

Mizuho Securities would shoulder the full cost of the forcible settlement plan, in which case its losses could mount further, industry insiders said...
[Japan Times]
You know, typing really is an underappreciated skill.