Mizuho Securities loses $223m in trading error

LOSSES & LAWSUITS

J-Com had just completed a $14 million initial public offering on the Tokyo market for smaller companies.

J-Com's shares, which were listed at ¥610, 000, dropped immediately to ¥572, 000 shortly after listing when the order was received to sell around 610, 000 shares at ¥1 each, instead of ¥610, 000 per share. As a result, J-Com sold only 2, 800 shares on its debut at the exchange.

Mizuho tried to rectify the mistake by buying back the shares through proprietary trading, which allows a bank to use its own reserves as capital for trades.

At the end of December, Japan's Financial Services Agency said in a statement that Mizuho had failed to train its traders sufficiently well, and did not have senior management in place to oversee these operations. The firm must submit a plan to the regulator to improve its business processes, and it must also clarify who was responsible for the trading error and designate a crisis management team.

The regulator also ordered nearly 300 brokerage firms in Japan to examine their stock trading systems and internal controls, and report by January 20 on needed improvements.

  • LinkedIn  
  • Save this article
  • Print this page  

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: