Investors who jumped at the chance to buy shares in Warren Buffett’s Berkshire Hathaway at a seemingly unbelievable discount yesterday are in for disappointment. A technical issue on the stock exchange has led to the cancellation of these trades.
On June 3, a data glitch caused the stock price of the global conglomerate to plummet to $185 per share from its previous closing price of over $620,000. This extraordinary drop represented a more than 99% discount on the Warren Buffett-led company, creating a whirlwind of activity among traders.
In a startling scenario, an investor who spent just $925 on the stock at the reduced price could have seen their investment soar to over $3 million in value. However, the New York Stock Exchange (NYSE) has announced that it will nullify all such trades due to the technical error.
The NYSE, in an update posted at 9 p.m. last night, stated it would “bust” all “erroneous” trades of Berkshire Hathaway stock executed at or below $603,718.30 per share. The root of the problem has been traced to an issue with the Consolidated Tape Association (CTA), which is responsible for providing real-time information on quotes and trades.
According to the CTA, the glitch was linked to problems with price banding, which “may have been related to a new software release” on the Securities Information Processor (SIP). To address the issue, the CTA has reverted to the previous version of the software. The CTA did not immediately respond to Fortune’s request for further comment.
During the glitch, the NYSE halted certain trades and is now working to identify which transactions were erroneous and eligible for cancellation. The technical issue has since been resolved, and all affected tickers are trading normally again.
Investors who took advantage of the error to buy heavily discounted shares in other companies will also see their trades canceled. This ruling is final and not open to appeal. Among the affected stocks are American restaurant chain Chipotle (CMG), mining company Barrick Gold Corporation (GOLD), and meme stock favorite GameStop (GME).
Notably, Berkshire Hathaway’s Class B stock (BRK.B) was unaffected by the glitch, and its Class A stock has since closed at over $631,000 per share.
This incident with Berkshire Hathaway is just the latest in a series of technical hiccups experienced by international stock exchanges. Last week, live data from the S&P 500 and the Dow Jones Industrial Average vanished from traders’ screens for about an hour, as reported by the Financial Times. Although normal service was restored, the cause of that outage is still under investigation.
While the NYSE issue has been resolved with relatively limited fallout, other exchanges have faced more severe consequences. In May 2022, a mishap at the London Stock Exchange (LSE) involving a trader at Citigroup led to the release of a $189 billion basket of equities to global markets. This error cost Citigroup nearly $70 million in fines from the UK’s Financial Conduct Authority.
These ongoing issues highlight the vulnerabilities in the systems of global stock exchanges and the significant financial implications that can arise from technical glitches. Investors and exchanges alike are reminded of the critical importance of robust and reliable trading infrastructure. The saying, Humans make mistakes but it takes a computer to really foul things up” is proving more and more accurate.
