- NEW YORK (Reuters)
- A slip of the finger led Bear Stearns Cos. Inc. <http://www.reuters.com/quote.jhtml?ticker=BSC.N&qtype=sym&qcat=news>
- BSC.N on Wednesday to erroneously enter an order to sell
$4 billion worth of stocks, fueling an already tumbling market.
-
- The order about 20 minutes before the closing bell was
the result of a "clerical error" and should have been entered
as $4 million, the New York Stock Exchange said in a statement. All but
$622 million of the orders were canceled before execution, it said.
-
- Bear Stearns told Reuters the error will have no material
impact on the company and declined to comment further.
-
- After a seesaw session, stocks sank in trading Wednesday.
The Standard & Poor's 500 stock index fell about 3 points between 3:40
p.m. and 3:46 p.m. EDT to below 827. The index closed at 827.91, down 20
points on the day.
-
- "When a large brokerage house like Bear Stearns
sells a large quantity of anything, people assume Bear Stearns knows something
and it will move the price," said Daniel Weaver, associate professor
of finance at the Zicklin School of Business at New York's Baruch College.
"It was a bear sign from Bear Stearns."
-
- The NYSE said the sell orders were for $4 billion worth
of "S&P securities," in reference to stocks that are part
of Standard & Poor's indices. It could not be reached for further clarification
as to which stocks may have been affected.
-
- "It's not very common," said Richard Repetto,
an analyst with Putnam Lovell NBF, of seeing this type of error on the
New York Stock Exchange. "This is a human error; it's not an electronic
error."
-
- A source familiar with the situation said the erroneous
order was the fault of a clerk not a trader.
-
- Weaver said he expects Bear Stearns to try to unwind,
or cancel, the trades that were executed.
-
- "But you have to have the other person willing to
do it," he said. "It depends on their relationship with the other
brokers. Since it happens to everybody, some of them are going to be willing
to do it to the extent that they can."
-
- This past June, shares of Nasdaq share dealer Knight
Trading Group dropped more than 50 percent in before-the-bell trading after
a software glitch triggered an accidental wave of selling in its own shares.
-
- In May 2001, U.K. stocks tumbled shortly before the close
after a Lehman Brothers dealer miskeyed a large sell order.
-
- Errors like the one witnessed Wednesday tend to occur
when clerks type in the wrong ticker symbol or the wrong price for a stock,
Weaver said.
-
- "I bet you everyone now tweaks their systems to
make sure that they catch orders that are extraordinarily large,"
he said.
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