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Abby Siau Professor Bolton English 101 21 November 2013 Behind the Scenes of Wizards of Wall Street Many economists will probably disagree with the cause of the near economic disaster in the essay Wizards of Wall Street as human error. Some may say that the near economic disaster was the new computer softwares fault. A new computer system had been b rought in to take over many of the most demanding trading tasks. As a result, the new software was creating an increase in workload for countless people like Michael Baltieri. The new system was making trading more hectic, and it serves as a possibility for Michaels near multi-million dollar transaction mistake. Despite the workload, those people are still held accountable for their transactions throughout the day. Therefore, Michaels mistake could not be blamed on the software. It was simply human error. Michael made the careless mistake of typing in the transaction into the incorrect field, and there was no one there to double check his transaction. Michael skimmed over his computer before submitting his transaction, but he did not clarify. There were six minutes left before closing time, Salomon was abuzz with traders, brokers, executives, managers, and clerks, and the transaction was not typed in correctly or double checked. When completing a transaction to this measure, it can cause major issues within the stock market. The definition of a stock market is that it makes it possible to grow small initial sums of money into larger ones without starting a business. With Michael creating a sharp drop in the stock market, the nation began to panic. Michaels mistake can be result of three

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things. Being that late in the day and six minutes away from the stock market closing time, the mistake of human error was caused by lack of time, distractions, and carelessness. The stock market is busy every minute of the day, and time seems to fall short. Within the last few minutes of the day, the whole nation is trying to submit transactions before the market closes. This is a major cause of human error within the stock market. In the film High Frequency Trading: Do Machines Control Wall Street, it states that humans are to blame for the mistakes made in the stock market. Humans tend to get out of control in the rush of the day, and this allows them to make mistakes. A clerk from the film says, Computers tend to make less errors than humans because of humans have the feeling of being rushed. When people are in a rush, logical thinking and common sense are blown out the window. This can cause major panic and nationwide chaos. From the website Bloomberg, an article called Sudden Stock Crashes Usually Caused by Human Error states, While the errors reflect sloppiness and highlight a lack of checks, they can be fixed by better risk management and oversight (Mamundi par. 5). Therefore, these panicked episodes of the clerks can be double-checked in the rush of the day. Distractions consume a humans mind every day keeping them from what that person should be focused on. In Wizards of Wall Street, Michael Baltieri was distracted by all of the yelling, running around, and constant movement of the fellow clerks and economists of Salomon Brothers. He was unable to focus on what field he was entering his transaction into, entered the amount into the incorrect field, and nearly caused a sharp fall in the stock market. Keeping focus is a very vital ingredient to the stock market. According to On Money and Markets: A Wall Street Memoir, the well-educated author, Henry Kaufman, states that the

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analysis of both temporary and long-term behavioral changes can exert great influence over the economy and the financial markets (Kaufman 287). Therefore, focusing on the transactions made in the stock market is very important. An abundance of tiny mistakes will eventually lead up to bigger and more catastrophic errors. Paying close attention to everything taking place, and paying attention to everything put in place is what keeps the nations stock market under control. Kaufman includes this important statement: The allocation of resources is purely and simply a consequence of the interplay of market forces. It is important to recognize that this seemingly abstract concept actually rests on a foundation of assumptions about human nature: that man is rational, ever striving to maximize returns in the market place; and that individuals and firms that do well will prosper, whereas those that fare poorly will suffer losses and even fail unless they modify their behavior and improve their efficiency. (Kaufman 287) With this, Kaufman is saying that successful firms will do well, and unsuccessful firms will fail. In order to be successful, firms need to stay on track with what they do, and avoid any distractions that can lead to big or small mistakes. Carelessness can be the cause of any mistake made by any person. Regarding the stock market, that is the absolute last place that carelessness can be present. In the eBook The American Economy: A Historical Encyclopedia, the essay Stock Market states A wide variety of institutionalist scholars have made the reasonable argument that economic markets require certain legal, political, or cultural institutions in order to function (par. 2). This means that the operations conducted in the stock market should be formal and suitably regulated.

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Carelessness should not be a regular occurrence in order to keep transactions under control. Carelessness can also be caused by a fat finger trades (Mamundi par. 5). This is when a person enters the wrong number of shares to trade or some other typographical error (Mamundi par. 5). This is also known as a typo. A typo is when the person typing has the intention of inputting one thing, but they accidently put something else. These typos can reflect sloppiness of that clerk completing the transaction. A way that carelessness can be prevented is the use of risk checks. Another initiative, the market-access rule adopted in 2010, requires risks checks on any order sent for execution. The two together are a message to market participants and venues to improve (Mamundi par. 17). Risk checks are a great way to avoid careless mistakes made by the ones completing the transactions. With the risk checks, there is a backup to double-check the transactions before actually submitting them. Therefore, carelessness is a plausible factor when contributing to human error in the stock market. While some people will support the claim that human error is responsible for Michaels mistakes, other economists may add that it could possibly be the computer systems fault. People may be computing correctly, but mistakes are made due to errors in the computer system. Computer system mistakes can be described as fault-tolerant computing. Fault tolerance is defined as a design that restrains a system to continue its intended operation. In the eBook Reliability of Computer Systems and Networks: Fault Tolerance, Analysis and Design, it states, any system containing redundant components or functions has some of the properties of fault tolerance (1). This means that systems with an abundance of functions have more room for error because of the inability to correct it all. One might also point out that the ubiquitous computer system is at present so taken for granted that operators often

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have few clues on how to cope if the system should go down (2). This is also true because so many people have complete trust in most computer systems. When they shut down unexpectedly, few have no clue on how to react or what to blame. Another way a computer system can be faulty is when using networks or the internet. Links cannot always be relied on because sometimes they can be unavailable. When this is the case, the links cannot be accessed when needed. Another computer issue can also be the software. Thus, software reliability theory must be developed to compute the probability that a software error might cause system failure (3). This is a major problem because small errors can cause the entire system to fail. This makes different softwares and systems extremely unreliable in business settings. Therefore, the new computer system could have been a possible cause behind Michael Baltieris near multi-million dollar transaction error. Michael Baltieri in Wizards of Wall Street nearly made a major multi-million dollar mistake due to the transaction being submitted into the wrong field in the computer. There is supported information that computer systems can be at fault for mistakes in the stock market. Computer systems cannot be trusted or relied on when full of many different functions and components. However, they make fewer mistakes than humans do. The best supported cause of Michaels mistake is that it was all based off of human error. Michael made the mistake due to lack of time, distractions, and plain carelessness. He was not focused clearly on what he was doing and nobody was there to double-check the transaction as well. Many sources provide support stating that human error has caused stock market mini-crashes in the past decade because of fat fingers and carelessness. Scholars and universities have tested this theory countless times and seem to uncover the same results that in fact, human error is the more

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plausible reason behind Michaels transaction mistake. Human error is very common in most areas of business and it is not deniable. People are only human, and human error happens every day in any given situation. Therefore, the most probable cause of Michael Baltieris near multi-million dollar transaction mistake is that Michael himself submitted the amount into the undesired field and submitting the transaction without any second thought making him a prime example of human error in the workplace.

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Works Cited High-Frequency Trading: Do Machines Control Wall Street? Films Media Group. Films On Demand, 2012. Web. 4 Nov. 2013. http://digital.films.com.storm.hgtc.edu:2048/PortalViewVideo.aspx?xtid=52425&psid =0&sid=0&State=&title=HighFrequency%20Trading:%20Do%20Machines%20Control%20Wall%20Street?&IsSearch =Y&parentSeriesID=&tScript=0 Kaufman, Henry. On Money and Markets: A Wall Street Memoir. New York: McGraw-Hill, 2000. Print. Mamundi, Sam. Sudden Stock Crashes Usually Caused by Human Error, SEC Says. Bloomberg. Ed. Lynn Thomasson. SEC, 18 June 2013. Web. 4 Nov. 2013. Shooman, Martin L. Reliability of Computer Systems and Networks: Fault Tolerance, Analysis and Design. Wiley-Interscience, 2002. eBook Collection (EBSCOhost). Web. 5 Nov. 2013. Steven, Casey. Wizards of Wall Street. Set Phasers on Stun. 2nd ed. Santa Barbra: Aegean Publishing Company, 1998. 109-116. Print. Stock Market. The American Economy: A Historical Encyclopedia. ABC-CLIO, 2011. Credo Reference. Web. 5 Nov. 2013.