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Dow Jones facing lawsuits over computer glitch : Swingers Discussion 74521
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TOPIC: Dow Jones facing lawsuits over computer glitch
Created by: DANANDFDN
Original Starting post for this thread:
Dow Jones facing lawsuits over computer glitch Seventy minutes of wrong information may have cost millions

Matt Chapman, vnunet(dot)com 01 Mar 2007

Computer glitch caused by heavy trading on the Dow Jones index may have led firms to lose millions of dollars.

Dow Jones has admitted that its calculation of the industrial average was wrong for 70 minutes, as systems struggled to cope with increased trading in the face of a falling Chinese market and America's economic uncertainty.

The error happened at 1.50pm EST on 27 February, leaving the overloaded systems not showing the correct fall in 400 supposedly live indices.

A back-up system at Dow Jones' New York offices updated the figures to their correct live status at 3pm, showing a sudden 178-point fall in the index.

This dramatic drop in the apparent space of a few seconds worsened the panic in a market that was already trying to reduce losses.

However, Dow Jones issued a statement in response to a letter from the House Committee on Financial Services distancing itself from the stock market conditions created by the glitch.

"It is important to understand that Dow Jones has no role in trading stocks or pricing individual securities, including securities underlying our indexes," said the official statement.

"We are conducting a detailed review of yesterday's events and do not believe the calculation delay or the subsequent catch up in the Dow Jones Industrial Average [DJIA] exacerbated the market decline, as the market was down sharply during the 70-minute period and rebounded strongly soon after the DJIA was brought current.

"We regret yesterday's unprecedented events and are taking remedial actions to prevent their recurrence, but we have no reason to believe that any investors were harmed."

Despite this claim Dow Jones is now expected to be hit by a number of lawsuits from trading firms which made decisions during that 70-minute period based on the wrong information.

The biggest claimants are expected to be derivative and index-linked mutual funds which used the Dow Jones calculations rather than figures from elsewhere

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Gary, my only thought on that is that the trading companies get their money, basically they are PAID, not to panic and to look at the big picture. Yes, the mutual funds are tied to the indices, but I'll bet by the time Monday rolls around, they'll find that the mutual funds have leveled out and regained what they might have lost on Friday. Of course, until Monday rolls around, I have no idea if I'm right, its just a guess, just as trading in general is just a GUESS.

Cambridge VT
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Not all traders look at induvudual companies. asd the article stated mutual funds are tied to these indices and they moved acordingly. 70 minutes is a mighty looooonnnnngggg time to have an error running.And when it was corrected the initial reaction will be based on the " sudden drop" which will lead you to say that whatever stock you might have in any of the 30 componaies that make up the Dow just went to shit, thus panic.

Miramar FL
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As someone who works beside a person who watches the averages all day (and I'm slowly learning to do that myself) as well as levels of stock trades, the trading firms will probably have a hard time winning any lawsuits. The derivatives probably will not, since 70 minutes of having the average be mis-stated by 170 or more points would have affected them directly. It was bad all day that day, if you only chose to look at the Dow Jones Averages and not the whole picture. If you checked your own ownership, or that of individual companies, the indicators were not as negative. S

Cambridge VT
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If they fucked up and caused additional problems and miscalulations then they have to pay the fiddle. I can easily see where those numbers can cause a severe reaction and induced panic selling which will further exapnd on an already worsening situation.

Miramar FL
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Dow Jones facing lawsuits over computer glitch Seventy minutes of wrong information may have cost millions

Matt Chapman, vnunet(dot)com 01 Mar 2007

Computer glitch caused by heavy trading on the Dow Jones index may have led firms to lose millions of dollars.

Dow Jones has admitted that its calculation of the industrial average was wrong for 70 minutes, as systems struggled to cope with increased trading in the face of a falling Chinese market and America's economic uncertainty.

The error happened at 1.50pm EST on 27 February, leaving the overloaded systems not showing the correct fall in 400 supposedly live indices.

A back-up system at Dow Jones' New York offices updated the figures to their correct live status at 3pm, showing a sudden 178-point fall in the index.

This dramatic drop in the apparent space of a few seconds worsened the panic in a market that was already trying to reduce losses.

However, Dow Jones issued a statement in response to a letter from the House Committee on Financial Services distancing itself from the stock market conditions created by the glitch.

"It is important to understand that Dow Jones has no role in trading stocks or pricing individual securities, including securities underlying our indexes," said the official statement.

"We are conducting a detailed review of yesterday's events and do not believe the calculation delay or the subsequent catch up in the Dow Jones Industrial Average [DJIA] exacerbated the market decline, as the market was down sharply during the 70-minute period and rebounded strongly soon after the DJIA was brought current.

"We regret yesterday's unprecedented events and are taking remedial actions to prevent their recurrence, but we have no reason to believe that any investors were harmed."

Despite this claim Dow Jones is now expected to be hit by a number of lawsuits from trading firms which made decisions during that 70-minute period based on the wrong information.

The biggest claimants are expected to be derivative and index-linked mutual funds which used the Dow Jones calculations rather than figures from elsewhere

Elmer NJ
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TOPIC: Dow Jones facing lawsuits over computer glitch