Tried to buy the dip after the Berkshire Hathaway glitch? Here's the bad news.

By Joseph Adinolfi

Here's why any trades on Monday's NYSE glitch will likely be reversed

An earlier version of this story misstated the name of the agency affected by Monday's glitch. It is the Consolidated Tape Association, not the Consolidated Trade Association.

Many investors apparently tried to pounce on the opportunity to buy Berkshire Hathaway's Class A shares at a discount of more than 99% on Monday, according to FactSet data.

But even if some traders managed to get their orders filled before activity was halted, it's likely they won't be able to keep the shares, according to officials at two Wall Street trading firms.

The New York Stock Exchange will be reviewing any trades that were potentially impacted by the glitch, a spokesperson told MarketWatch.

Furthermore, Joe Saluzzi, co-founder of Themis Trading, said the trades that triggered Monday's eyebrow-raising decline almost definitely won't hold due to the exchange's policy on "clearly erroneous transactions," which allows market makers to contest trades they believe were the result of a glitch.

"These are definitely going to be busted," Saluzzi told MarketWatch during a phone interview on Monday. "They are so far away from the mark."

Jonathan Corpina, senior managing partner at Meridian Equity Partners, agreed. Some trades appeared to be executed at the seemingly erroneous prices - which is what triggered the trading halt on Monday - and Corpina also expects them to ultimately be reversed.

Berkshire (BRK.A), Bank of Montreal (CA:BMO), Barrick Gold (CA:ABX) and 37 other stocks were halted for volatility by New York Stock Exchange group exchanges on Monday morning after showing steep declines, according to a statement from a New York Stock Exchange spokesperson. Berkshire shares were shown falling 99.97% to $185.10, compared with $627,400 at Friday's close, according to FactSet data. They were halted at 9:50 a.m. Eastern time, according to NYSE's website.

Hypothetically, this would have cut Berkshire's market capitalization nearly in half - to $536.3 billion at around 11 a.m. Eastern time on Monday, compared with $897.1 billion as of Friday's close, according to Dow Jones Market Data. Trading in Berkshire's Class B shares BRK.B was unaffected by the glitch.

Trading in all affected names resumed shortly before noon. The glitch was the result of a technical issue involving industry-wide price bands published by the Consolidated Tape Association's Securities Information Processor, which triggered "limit-up/limit down" trading halts shortly after Wall Street opened on Monday, the NYSE spokesperson said.

Monday's incident was reminiscent of a trading glitch that occurred in January 2023, when issues with the NYSE's opening auction led to trades in more than 250 securities being filled at erroneous prices. At the time, the exchange said those trades would not be honored.

-Joseph Adinolfi

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06-04-24 0757ET

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