Fifty Japanese and foreign brokerages have offered to give up a combined 20.9 billion yen in profits they made by exploiting a trading error involving shares of staffing firm J-Com Co. in December, an industry group said Tuesday.
The money will go into a "securities market infrastructure development fund" the Japan Securities Dealers Association recently set up. Some of it will be used for such means as developing a computer system to back up the existing trading systems at stock exchanges and brokerages in the event of emergencies, JSDA said.
The error occurred when a Mizuho Securities Co. trader accidentally placed an order Dec. 8 to sell 610,000 J-COM shares for 1 yen, instead of the intended order of one share for 610,000 yen, prompting the brokerages to legally snap up J-Com shares cheap and sell them later for huge profits.
Financial Services Minister Kaoru Yosano and other politicians then criticized these brokers for exploiting the error, which the Tokyo Stock Exchange's computer system failed to detect and then failed to cancel, despite repeated attempts by the trader.
JSDA called on member brokerages to give up the profits to help prevent the industry's reputation from deteriorating. Individual investors could keep their profits.
Of the 50 brokerages, UBS Securities Japan Ltd. has made the largest offer, at 12 billion yen, followed by 3.3 billion yen from Credit Suisse First Boston Securities Co. and 1.1 billion yen by two firms of the Nikko Cordial Securities group.