Typing Error Triggers Loss of 240 Billion Won

One little mistake caused a loss of over 240 billion won. Mizuho Securities lost 27 billion yen (240 billion won) by making an error in the orders of J-Com shares, a newly listed staffing firm.

Mizuho received a call from a client to sell one share of J-Com for 610,000 yen, but the brokerage wrongly put an order to sell 610,000 shares for 1 yen each. The system delivered a warning signal for violating the price limit for single share transactions, but the trader continued the transaction.

The number of shares issued by J-Com is 14,500. The wrongly placed order is 42 times the number.

Mizuho hurriedly put in orders to buy back the shares, and within 10 minutes had acquired the remaining 470,000 shares. The problem is that 140,000 shares were already sold. Mizuho must transfer the stock certificates to the investors by December 13, the fourth business day.

Shares of J-Com started at 672,000 yen and fell by the 15 percent limit to 572,000 yen. When Mizuho bought back the shares, the prices shot back up by the maximum permitted 15 percent, and closed at 772,000 yen.

J-Com is a newly listed company, so only 2,800 shares have been traded. Even if all the shares are bought, it is impossible to transfer the stock certificates to all the buyers. Some shares must be bought from some investors and then sold to other investors; this process will be very time-consuming. Payment for the delay is inevitable. Also, in order to buy back the shares, the closing price must be paid, and surcharges must be added so that investors will be inclined to sell the stocks.

Mizuho already suffered losses of approximately 27 billion yen. Add on the surcharges, and the losses are expected to increase greatly. Due to the typing error, the Nikkei dropped 301.3 yen, the third largest in history, and closed at 15,183.36 yen.

pisong@donga.com