Mizuho Securities Co. will sue the Tokyo Stock Exchange for 40.4 billion yen for the loss it incurred in connection with an erroneous order it placed for J-Com Co. shares last December, sources said.
Mizuho Securities will argue in the suit to be filed by month's end that it lost 40.7 billion yen because the TSE's system did not allow the order to be canceled, they said.
The TSE rejected a request by Mizuho Securities in August to pay that sum. TSE President Taizo Nishimuro said there were "no intentional or critical faults" on the bourse's side.
The brokerage made a similar request again this month only to meet a similar rejection, the sources said.
Last December, Mizuho Securities, a unit of Mizuho Financial Group Inc., mistakenly placed an order to sell 610,000 shares of staffing company J-Com for 1 yen, instead of the intended order of one share for 610,000 yen.
It tried to withdraw the sell order shortly after noticing the data entry mistake, but the TSE's computer system failed to smoothly process the cancellation order.
The brokerage says it incurred the 40.7 billion yen loss due to buying back the massive number of shares from investors, and argues that the 40.4 billion yen portion of the loss stems from the TSE's system failure.
The TSE admitted later that trouble with its trading system played a part in the loss, and Takuo Tsurushima, TSE president at the time, later resigned.