The encyclopedia · Trading & Investing · Financial decision · 1993–1999
Codelco's trader hit 'buy' instead of 'sell' — and lost $207M of Chile's copper wealth
Juan Pablo Davila accidentally bought when he meant to sell, then tried to trade his way out — and lost 0.5% of Chile's GNP.
Codelco · 1993
What happened
Codelco is Chile's state-owned copper mining company, the world's largest copper producer. It generates a significant portion of Chile's export revenue and is a pillar of the national economy.
In 1993, Codelco's chief copper trader, Juan Pablo Davila, made a catastrophic error: he accidentally instructed his computer to 'buy' when he meant to 'sell' copper futures. When he realized the mistake, he tried to recoup the losses by making increasingly large and speculative trades in copper, silver, and gold futures — making the situation worse with each attempt.
The total loss reached approximately $207 million, about 0.5% of Chile's gross national product at the time. The case was so notorious in Chile that the verb 'davilar' entered local usage, meaning 'to botch things up royally.'
Davila won the 1994 Ig Nobel Prize in Economics for his actions. He was convicted in 1996 for tax evasion and in 1999 for fraud, receiving prison sentences of 3 and 8 years respectively.
Why it happened
- Davila hit 'buy' instead of 'sell' on a copper futures order — a simple keyboard error that any trader could make, but one he then tried to hide by doubling down on increasingly risky bets.
- The attempt to trade his way out of the initial mistake turned a $5 million error into a $207 million loss — the classic rogue trader pattern of escalating cover-ups.
- Codelco lacked the real-time risk monitoring and position limits that would have caught the unauthorized trades before they grew catastrophic.
The lesson
The first mistake is hitting the wrong key. The second mistake — trying to trade your way out of it — is the one that costs $207 million. A trading floor needs position limits, not trust.
Sources
- Wikipedia — List of trading losses
- Wikipedia — List of Ig Nobel Prize winners
- Trader Is Accused in Chile — New York Times (via Bloomberg, 1994)
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