Feeds

Finance software bug causes $217m in investor losses

Dev pays $2.5m for hiding decimal-percentage flaw

3 Big data security analytics techniques

A developer of financial software has agreed to pay $2.5 million to settle charges stemming from his concealment of a bug that caused about $217 million in investment losses.

Barr M. Rosenberg, 68, of Sea Ranch, California, developed the quantitative investment modeling software and put it into production in 2007 to help clients make investment decisions. The program captured and processed huge amounts of data contained in financial reports and other publicly available information to balance publicly traded company's earnings and valuation against common risk factors.

After pioneering the field and serving as the original developer, he went on to oversee code improvements over the next few years.

In 2009, an employee of Rosenberg's company, Barr Rosenberg Research Center, discovered a two-year-old bug in the code that caused it to incorrectly calculate risks. The error stemmed from the failure to reconcile the use of decimals in some of the data and percentages in other information, causing risks to routinely be underrepresented. The employee disclosed his findings to Rosenberg and the firm's board of directors that same year.

“Rosenberg directed the others to keep quiet about the error and to not inform others about it, and he directed that the error not be fixed at that time,” officials with the Securities and Exchange Commission alleged (PDF). The error caused about $217 million in losses to more than 600 client portfolios.

In addition to paying the $2.5 million penalty, Rosenberg agreed to never again work in the securities industry.

The SEC said Rosenberg willfully violated anti-fraud provisions of the Investment Advisers Act of 1940. He agreed to the penalties without admitting or denying the SEC's findings.

The agreement comes seven months after a related Rosenberg firm, AXA Rosenberg, agreed to pay $242 million to settle charges. ®

This article was updated to make clear the amount of investment losses was "about $217 million," that 2007 was the year the software went into production, and that AXA Rosenberg and Barr Rosenberg Research Center are related firms.

Top three mobile application threats

More from The Register

next story
This time it's 'Personal': new Office 365 sub covers just two devices
Redmond also brings Office into Google's back yard
Inside the Hekaton: SQL Server 2014's database engine deconstructed
Nadella's database sqares the circle of cheap memory vs speed
Oh no, Joe: WinPhone users already griping over 8.1 mega-update
Hang on. Which bit of Developer Preview don't you understand?
Microsoft lobs pre-release Windows Phone 8.1 at devs who dare
App makers can load it before anyone else, but if they do they're stuck with it
Half of Twitter's 'active users' are SILENT STALKERS
Nearly 50% have NEVER tweeted a word
Internet-of-stuff startup dumps NoSQL for ... SQL?
NoSQL taste great at first but lacks proper nutrients, says startup cloud whiz
IRS boss on XP migration: 'Classic fix the airplane while you're flying it attempt'
Plus: Condoleezza Rice at Dropbox 'maybe she can find ... weapons of mass destruction'
Ditch the sync, paddle in the Streem: Upstart offers syncless sharing
Upload, delete and carry on sharing afterwards?
Microsoft TIER SMEAR changes app prices whether devs ask or not
Some go up, some go down, Redmond goes silent
prev story

Whitepapers

Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.