Mizuho Settles Trade Debacle
Japanese Minister Scolds Brokers
For Taking Advantage of Error
By YUKA HAYASHI and ANDREW MORSE
Staff Reporters of THE WALL STREET JOURNAL
December 14, 2005
TOKYO -- As Mizuho Securities Co. settled its massive botched trade yesterday, several big brokerage houses such as UBS Securities, Morgan Stanley and Lehman Brothers Holdings Inc., as well as thousands of individual investors, walked away with handsome profits.
The development showed how some smart investors quickly turned a misfortune into a money-making opportunity.
On Thursday of last week, the brokerage arm of Mizuho Financial Group mistakenly offered to sell 610,000 shares of a small recruitment company called J-Com Co. at one yen, instead of the intended one share at 610,000 yen ($5,095). Under an emergency settlement plan implemented yesterday, Mizuho paid 912,000 yen a share to investors who bought shares of J-Com, suffering a loss of $335 million. The settlement price was 53% higher than the average price that investors paid on their first day of trading.
So far, UBS AG's brokerage unit appears to be by far the biggest beneficiary. The Swiss firm said it had accumulated 38,198 shares of J-Com, more than twice the number of the outstanding shares of the company. UBS wouldn't discuss further details of its purchase, but using the average purchase price of 595,000 yen during Thursday's trade, its profit would amount to roughly $101 million.
Japanese Minister Scolds Brokers
For Taking Advantage of Error
By YUKA HAYASHI and ANDREW MORSE
Staff Reporters of THE WALL STREET JOURNAL
December 14, 2005
TOKYO -- As Mizuho Securities Co. settled its massive botched trade yesterday, several big brokerage houses such as UBS Securities, Morgan Stanley and Lehman Brothers Holdings Inc., as well as thousands of individual investors, walked away with handsome profits.
The development showed how some smart investors quickly turned a misfortune into a money-making opportunity.
On Thursday of last week, the brokerage arm of Mizuho Financial Group mistakenly offered to sell 610,000 shares of a small recruitment company called J-Com Co. at one yen, instead of the intended one share at 610,000 yen ($5,095). Under an emergency settlement plan implemented yesterday, Mizuho paid 912,000 yen a share to investors who bought shares of J-Com, suffering a loss of $335 million. The settlement price was 53% higher than the average price that investors paid on their first day of trading.
So far, UBS AG's brokerage unit appears to be by far the biggest beneficiary. The Swiss firm said it had accumulated 38,198 shares of J-Com, more than twice the number of the outstanding shares of the company. UBS wouldn't discuss further details of its purchase, but using the average purchase price of 595,000 yen during Thursday's trade, its profit would amount to roughly $101 million.
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