“Fat-Finger” Clerk Mistakenly Sends $6 Billion to a Hedge Fund and Other Misadventures
A “Fat-Finger,” error commonly refers to the big guy with sausage-sized fingers sending incomprehensible texts due to hammering the wrong keys on his Blackberry. It also sometimes defines a trader who erroneously strikes a key on his computer sending a tidal wave of erroneous high-frequency trades roiling the stock market. In this instance however, a young back office employee of a major bank mistakenly paid $ 6 billion (Yes, $ 6 billion) to a hedge fund client after the clerk entered the wrong amount.
We often look at banking transgressions and assume the worst of people. The longer I have been involved with recruiting and covering Wall Street as a writer/publisher, it feels that while we have bad apples (okay, a barrel of bad apples), serious problems erupt due to the fact that the banks are too big to control and manage. It is too easy for mistakes or misdeeds to occur without notice. One division is unaware of what another unit is doing. People go about their business un-managed and the results are sometimes terrible.
Other times, there is a combination of rogue activity coupled with general corporate dopiness. For instance, the current trials of LIBOR rigging traders reflect the confluence of morally corrupt traders and clueless management (Maybe I’m being too generous)Ex-Rabobank Trader Says `Libor Time’ Was Call to Fix Rates.
Now the following looks pretty bad. Credit Agricole fined $800m for US sanctions violations is said to be in discussion to pay an $800 million fine for sanctions violations by dealing with Iran and other prohibited countries. Once shocking, now a multi-million fine is met with a yawn. The fine is a merely a traffic ticket and considered a nuisance cost as part of the overall game.
Although, the stock market has bounced back from the precipitous drops and $1,000 points declines from just a couple of months ago, many firms are still facing strong headwinds. Increased regulatory and compliance costs, additional capital requirements, slowdown in China, and many other factors are hurting their bottom lines.
It also doesn’t help when goofy clerks wire $6 billion dollars without anyone noticing!