How a wrongly pressed button
cost the bank $ 225 million
Trouble for Mizuho Securities, a century-old Japanese investment bank, began on the morning of December 8, 2005. On that day, the shares of the recruiting company J-Com were put up for sale on the Tokyo Stock Exchange. The IPO was supposed to amount to $ 3.1 billion.
J-Com instructed the bank to sell one share for 610 thousand yen ($ 5080). But the broker pressed the wrong button and sent an order to sell 610 thousand shares at 1 yen per share ($ 0.008). The number of offered securities was 41 times more than their actual number. Nevertheless, the exchange accepted and processed the order.
Mizuho tried to cancel the bid three times. The cheap papers quickly attracted buyers: according to Kommersant, in a short time, the controlling stake changed its owner about 50 times.
The bank tried to rectify the situation by buying at its own expense all available J-Com shares, including "virtual" securities that do not exist in reality, which appeared on the stock exchange as a result of an error.The total losses for the bank amounted to at least $ 225 million, and the entire holding of Mizuho Financial Group lost about $ 406 million.
The Swiss bank Credit Suisse made a profit from this mistake: the company bought 2,289 shares of J-Com at a low price and earned $ 6.2 million. Such a deal brought $ 5.6 million to the American investment bank Lehman Brothers.But two local traders got even more profit, earning $ 21.6 million in total. And 27-year-old trader Takashi Kotegawa, officially unemployed, received $ 16.6 million. According to him, he previously lost up to $ 833 thousand a day and was close to despair.
As a result, not only Mizuho Securities apologized, but also the Tokyo Stock Exchange. A local district court ordered the exchange to pay about $ 89 million to Mizuho, and its head resigned a few days later.
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