IE 11 is not supported. For an optimal experience visit our site on another browser.

Six firms may return profit from botched trade

Six brokerage houses are considering returning about $140 million (16.8 billion yen) in windfall profit they made on a trade error last week, a news report said Wednesday.
/ Source: The Associated Press

Six brokerage houses are considering returning about $140 million (16.8 billion yen) in windfall profit they made on a trade error last week, a news report said Wednesday.

The move would offset part of some $333 million (40 billion yen) in losses Mizuho Securities Co. has suffered from the settlement of the erroneous order.

On Thursday, a trader at Mizuho erroneously entered an offer to sell 610,000 shares of J-Com for 1 yen (less than a penny) apiece. The brokerage had intended to sell 1 share at $5,040 (610,000 yen).

As J-Com’s share price plunged from its debut of $5,600 (672,000 yen) to a predetermined minimum price of $4,767 (572,000 yen), investors snapped up some 700,000 shares.

The six companies bought about 53,000 J-Com shares with UBS Securities Japan Ltd. getting nearly 39,000 shares and pocketing about $100 million (12 billion yen), according to Kyodo News, an independent Japanese news agency.

The five others are Morgan Stanley Japan Ltd., Lehman Brothers Securities Inc., Credit Suisse First Boston Securities Co., Nikko Cordial Securities Co. and Nomura Securities Co., according to Kyodo.

Mizuho spokesman Keita Onuki confirmed that the company has lost about $333 million (40 billion yen), but could not confirm the report.

Financial Services Minister Kaoru Yosano criticized the companies Tuesday for taking advantage of the mishap, saying it was not a “pretty story.”

In a related movement, Japan’s financial watchdog on Wednesday ordered the Tokyo Stock Exchange to improve its operations after the exchange was found partly responsible because of its computer glitch which could not immediately stop the erroneous sell order.

TSE should ensure there are no further trading problems, and find out those responsible for the mishap, the Financial Services Agency said.

Trading of J-Com stocks resumed Wednesday after it was suspended Friday and missed three trading days. The shares ended at $8,500 (1.02 million yen) per share, up from $7,600 (912,000 yen), the price which was set by a securities clearing agency to settle buying orders earlier.