TSE ¥11 billion fine to Mizuho upheld

Kyodo

The Tokyo High Court on Wednesday upheld a 2009 lower court ruling and ordered the Tokyo Stock Exchange to pay about ¥10.7 billion in damages to Mizuho Securities Co. over the brokerage’s hefty losses on a misplaced trading order.

“The TSE is responsible for failing to suspend overall stock trading promptly,” presiding Judge Shintaro Kato said of the TSE trading system glitch that kept Mizuho from canceling a misplaced trading order.

On Dec. 8, 2005, Mizuho Securities mistakenly placed a sell order for 610,000 shares in J-Com Co. for ¥1 on the staffing firm’s debut on the TSE Mothers market, although it intended to sell one share for ¥610,000.

Mizuho Securities tried to cancel the sell order immediately but the TSE’s computer system failed to process the cancellation order, causing the brokerage to incur more than ¥40 billion in losses.

The TSE denied responsibility for the losses, arguing that the system failure was rare, while Mizuho Securities argued that the bourse should have taken appropriate steps to halt trading and should have provided a system that would have properly processed the cancellation of orders.