Fat-finger mistakes that cost the city dear

Last week, Nasa mission specialists admitted that they had made a serious mistake when it was revealed that the wrong instructions were sent to the Voyager 2 space probe. This resulted in the loss of contact.

Incorrect commands sent to Voyager 2 caused it to tilt its satellite antenna two degrees towards Earth. This meant it was no longer able to send or receive any messages. Nasa confirmed a few days later that it had received a “heartbeat signal” from the craft. It regained full control of the craft on Friday, much earlier than they had anticipated.

Voyager 2 and its twin, Voyager 1 were launched in 1977 for the exploration of outer planets within the solar system. Voyager 1 completed its mission in 2012 and was followed six years later by its twin.

Voyager 2’s gaffe, which occurred 12.3 billion miles away from Earth, could be considered as the most extreme example of “fat-finger errors” caused by incorrectly typing data into a machine.

The City is well-versed in this type of mistake, as these famous cases show.

Last year, a Cititrader who was working from home added an additional zero to a trade in the early morning trading. This error led to a temporary sell-off of European stocks, which temporarily erased about €300 billion in shares on multiple stock exchanges.

Citi has blamed the incident on human error, but it’s not believed that WFH was directly involved. Citi, unlike many other large banks, is relaxed about its staff continuing to pursue “hybrid working” after the pandemic.

Jane Fraser, Citi’s British-born CEO, told analysts that the company had heavily invested in new technology to prevent fat-finger errors in the future. She said that the error rate has dropped by 86%.

Unexpected bonuses are always welcome. So imagine the joy of 2,000 Samsung Securities employees in 2018 who received a $105 Billion dividend as the company’s shares. Staff members in a stock ownership scheme were due to receive payouts of 2.8 billion won ($2.6 million) but an employee accidentally entered “shares” into the system instead of “won”. The payout was 30 times more than the market value of the company.

The broker realized the error and stopped trading after 37 minutes, but 16 employees still sold the shares. Later, the staff faced legal action for their attempt to profit from this mistake.

Legends have been made out of some of the most outrageous fat-finger transactions. In 2018, for example, Deutsche Bank accidentally wired €28.6 billion to a clearinghouse, only to reverse the trade.

A German employment tribunal uncovered in 2013 the story of a trader who had fallen asleep while pressing the “2” on his keyboard. This turned a €62 transaction into an €222 million deal.

In September 2006, a rugby-ball was thrown on the trading floor of Bank of America at an untimely moment. A colleague was about to execute a $50 million deal when boisterous co-workers threw the ball onto his keyboard. The trade was executed ahead of schedule. The graduate trainee who threw the ball was reprimanded.

The pound fell 9 percent against the dollar in early trading on the morning of October 7, 2016 — without any apparent cause. It then quickly recovered the majority of its loss. Sterling’s “flash crash”, as it was called, gained immediate notoriety. However, traders were quick to place the blame on computer algorithms and not pudgy numbers.

The Bank for International Settlements’ report on the matter could only blame a variety of factors, ranging from the quiet hours of the day to the behavior of computer programs. However, it did admit that the presence of staff who were less knowledgeable about the suitability for particular algorithms for market conditions may have amplified this movement.

The engineers at Nasa can rest easy knowing that they are in good company. Maybe a career in finance is calling. It’s not rocket-science.