NYSE Glitch Costs Interactive Brokers $48 Million

Interactive Brokers, one of the largest online trading platforms, announced a loss of approximately $48 million following a significant glitch at the New York Stock Exchange (NYSE) earlier this month. The error caused a temporary, drastic drop in the displayed value of Berkshire Hathaway’s Class A shares, briefly making it appear as though they had lost nearly all their value. On Wednesday, the firm revealed it is considering legal action to recover these losses.

The incident occurred on June 3, when a technical glitch halted trading and caused Berkshire Hathaway’s Class A stock to plummet from about $620,000 to $185. This sudden drop led some clients of Interactive Brokers to submit buy orders, attempting to take advantage of what seemed to be a rare opportunity. As trading resumed approximately two hours later, these orders were executed at various prices, with Berkshire’s stock rebounding to its original price and even reaching a peak of nearly $742,000.

Interactive Brokers has sought to cancel trades executed at “anomalously high prices” by filing petitions with the NYSE. However, the NYSE denied these requests. In response, Interactive Brokers stated that it is exploring all available options to recover the losses, which include potential legal claims against the NYSE or other related entities. Despite this significant financial hit, Interactive Brokers, which reported $132.2 billion in assets as of March, maintains that the loss will not impact its overall financial condition.

Thomas Peterffy, the chair and founder of Interactive Brokers, has an estimated net worth of $38.1 billion. He served as the company’s CEO until stepping down in 2019. The glitch also had a notable impact on Warren Buffett’s net worth, which was briefly listed as having decreased by $136 billion. If the share price of $185.10 had been accurate, it would have marked the lowest level for Berkshire Hathaway’s Class A stock since 1979. Currently, Buffett is the world’s eighth-wealthiest individual, with a net worth of $134.5 billion according to recent estimates.

The NYSE attributed the trading disruption to inaccurate share price information provided by the Consolidated Tape Association. This technical issue affected several companies, including Berkshire Hathaway, Chipotle, GameStop, and AMC, causing their stocks to halt trading and display erroneous losses. While the exact cause of the glitch remains undetermined, the NYSE has stated that it does not believe a cyber attack was involved, as a spokesperson told the Financial Times.

Interactive Brokers continues to evaluate its next steps in the wake of the glitch, underscoring the significant financial risks that technical errors can pose in the high-stakes environment of stock trading. As the firm navigates potential legal challenges, the incident highlights the need for robust safeguards and accurate data management in the financial industry to prevent similar occurrences in the future.