A Selection of the Worst Fat Finger Blunders
The pound has made headlines recently, after dropping by an alarming six per cent in a matter of minutes. This represented one of its greatest falls in documented history, and left many traders, commentators, and even experienced brokers scratching their heads as they searched for a catalyst.
Although no concrete answers have yet been provided, a leading theory is that the drop was caused by a ‘fat finger’ blunder; a mistake made whilst typing in an order. Although such simple human error may seem outlandish in our high-tech modern world, it would not be the first time that such an event had occurred.
Here, we look at some of the worst fat finger blunders on record…
In 2015, a junior banker at world-renowned Deutsche Bank mistakenly transferred an astonishing $6 billion to a single hedge fund customer. Although a shockingly severe mistake to make, it was neither the first nor the last time that such a blunder has taken place.
An even more dramatic example is provided by an anonymous broker in Japan. In 2014, the guilty party entered a transaction worth a phenomenal $622 billion in Japan’s over-the-counter market. Although rapidly cancelled, the anomalous order sent significant shockwaves across trading desks, with huge volumes of trades showing in major names such as Toyota and Nomura.
Of course, there are also traders who have been guilty of making this mistake, and on April 22nd 2012, one such culprit emerged. After accidentally entering bids with a rogue decimal place, the dollar rose to more than 100 times its established value against the Swiss franc. For a while, this pushed the dollar from its previous SF0.90 value to an astonishing SF90.00.
The biggest order ever placed on the London Stock Exchange was a result of a fat finger error that occurred in 2001. Although immediately cancelled, it amounted to £8.1 billion of shares in a company called Autonomy; a value four times greater than the enterprise’s market capitalisation. Autonomy would later sell for £11.1 billion in a controversial deal by Hewlett-Packard.
In 2005, a Japanese brokerage known as Mizuho Securities issued an order to sell 610,000 shares of a recruitment company, J Com. These were priced at Y1 each. In fact, the company had actually intended to sell a single share for Y610,000. The mistake was made by a trainee, and then exacerbated by a glitch on the Tokyo Stock Exchange, which made it impossible to cancel the trade.
UBS Warburg Trader
Another guilty of a severe fat finger blunder was a UBS Warburg trader, who instead of selling 16 shares for Y600,000, sold 610,000 at Y6. The order was eventually cancelled, but 64,915 of the shares, which were in Japanese advertising giant Dentsu, had already sold. Although the bank did manage to retain its book-running position, it had to re-purchase each of them, meaning that its mistake cost it around $100 million.
Bear Sterns is now defunct, and looking at this major fat finger blunder, it’s little wonder that it eventually ran into difficulties. In October 2002, the American bank entered a sell order for $4 billion, rather than the intended $4 million. This catalysed a dramatic 100-point drop in the Dow Jones Industrial Average, and left many on the financial markets shaking their heads.
Another culprit is the now also defunct Lehman Brothers. They were guilty of entering a sell order for shares in BP and AstraZeneca that was 100 times larger than it should have been, at £300 million as opposed to £3 million. This severely dinted the main London index during its final moments of trading.