Tuesday, June 07, 2011

Goldman Sachs Made a Boo-Boo

Here is why proofreading is important:

On February 11th Goldman issued four warrants tied to Japan’s Nikkei index which were described in three separate filings amounting to several hundred pages. Buried in the instructions to determine the settlement price was a formula that read “(Closing Level – Strike Level) x Index Currency Amount x Exchange Rate”. It is Goldman’s contention that rather than multiplying the currency amount by the exchange rate, it should have divided by the exchange rate. Oops.

Pretty much the smallest mistake you can get, but it is going to cost about HKD350 million. So next time, do not belittle any proofreading job. It could cost you millions. 

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