Düsseldorf Alleged “human error” costs the major US bank Citigroup almost half a billion dollars. In August 2020, the bank transferred a total of $ 893 million to several creditors as loan administrator for the cosmetics manufacturer Revlon, appearing to be repaying a loan that was actually not due until 2023. In fact, Citigroup said it only wanted to transfer $ 7.8 million in interest that was due at the time. The bank had demanded the money back. Several lenders agreed, but ten refused.
A court ruled that the bank was not entitled to a repayment after the alleged transfer error. Judge Jesse Furman said the payments are final. In his ruling, the judge wrote that the lenders were entitled to believe that the payments were intended. To believe that Citigroup, as one of the most progressive financial institutions in the world, was making such a big mistake would have been irrational.
Incorrect orders and purchases of this kind kept coming and going. A look at the past shows that financial institutions do not always get away without damage.
Rookie mistake
The Deutsche Bank is not an unknown company when it comes to unpleasant transfer errors. Almost two years ago, Deutsche Bank came under fire for a “fat finger error”. In the financial sector, for example, wrong entries on the computer are called, typing mistakes, so to speak. Germany’s largest financial institution inadvertently transferred 28 billion euros to an account at the Frankfurt derivatives exchange European Exchange (Eurex) as part of its daily trading in derivatives.
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Three years earlier, the largest domestic financial institution inadvertently sent six billion dollars to a hedge fund. A new employee in London is said to have pressed the zero on his keyboard too often and the boss who approves transactions of this kind was on vacation. The following day the money was transferred back.
Transfer to nirvana
A process that is hard to believe: In September 2008, the German development bank KfW transferred over 300 million euros to Lehman Brothers as part of a foreign exchange swap transaction. However, the major US bank had previously filed for bankruptcy. The response is huge, followed by crisis meetings and visits to the Federal Ministry of Economics and Finance. Two board members are declared responsible and dismissed, and a division manager is retired.
Expensive microsleep
62.40 euros – this sum should be transferred from a pensioner’s account on one day in April 2010. Unfortunately, the transfer amounted to EUR 222,222,222.22 after a bank employee at Frankfurter Volksbank nodded off and stuck his finger on the “2”. The system message “Check especially” appears for amounts in this amount. An employee nevertheless approved the transaction. Only a third employee noticed the mistake.
Lord of the balls at rest
A $ 50 million deal was waiting for the Bank of America 2006 to the final approval via the Enter key. Only the supervisor still had to agree. The dealer who had prepared this assignment suddenly found himself exposed to a flying football. A trainee had thrown this across the room. Annoying: The football landed on the keyboard and released the Enter key. The trainee was given a severe reprimand.
Such breakdowns also occasionally occur in the trading rooms.
(Photo: dpa)
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Expensive buyback
When the UBS Warburg at the end of 2001 the share issue of the Japanese advertising agency Dentsu accompanied, there was an embarrassing and very expensive mishap in the early phase: A trader wanted to sell 16 shares at 600,000 yen each – but offered 610,000 papers at 6 yen. The order could only be partially canceled. The money house had to buy back the sold shares at market price, which cost them over $ 100 million.
A year without a Christmas bonus
A trainee for the Japanese trader made a similar mistake Mizuho in 2005. The 24-year-old wanted to sell a share in the telecommunications company for 610,000 yen on the Tokyo Stock Exchange. However, he offered 610,000 shares for one yen. Mizuho was able to agree on a settlement with some financial institutions that bought the shares at such low prices. The incorrect entry cost over $ 200 million. The result: the entire workforce was cut off the Christmas bonus.
More than one zero too many
About seven million Roche-Shares existed at the beginning of 1999. Nevertheless, a stock trader bought the UBS ten million papers from the pharmaceutical company in just a few minutes. The simple explanation: He simply entered too many zeros.
989,529 – a number, a mix-up
An unfortunate mix-up would have London Stock Exchange (LSE) cost nearly £ 60 billion in the fall of 1997. A trader had ordered 989,529 shares in the pharmaceutical company Zeneca three times within an hour. Instead of the purchase volume, he had accidentally entered Zeneca’s six-digit stock exchange code. The London Stock Exchange grew suspicious and double-checked the order before executing it. There was still a need to speak afterwards.
Supported
The London Stock Exchange serves as the setting again: A trader leaned his elbow on the keyboard there in 1999 and carried 16,000 shares of 600 times Premier Oil Bought. Total volume: Nearly two million pounds. This deal alone exceeded the stock’s average daily trading volume by five times.
In 1998, a trader at the US investment bank Salomon Brothers was similarly unhappy after he had landed his elbow on the “Sofort-Sell” and sold more than 10,000 futures on French government bonds. This function of this key was subsequently deactivated.
Millions and billions
As a dealer of the major US bank Morgan Stanley Typed an order for 100,000 securities into the system in February 2007, he overlooked the automatic multiplier of 1000. The transaction amounted to 10.8 billion instead of 10.8 million dollars. Before the bank registered the incorrect entry, 875 million shares had already been sold.
Life at the limit
A trader swapped the input masks for the number of contracts and the limit in September 2002. The plan was actually to sell a contract when the Dax exceeds the 5180 mark. Instead, he sold 5,180 contracts immediately and without a limit, i.e. without an upper or lower limit. The market operator was able to reverse some of the deals.
More: Citigroup does not get back more than half a billion dollars after a transfer error
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