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The $242 Million Software Error

Cost could increase

2 min read
The $242 Million Software Error

In April of 2010, AXA Rosenberg, a privately owned investment management company, sent a letter (see PDF here) to its clients stating that it had discovered a "coding error that affected the flow of information between the risk model and our portfolio optimization process." As a result, "common-factor risks were significantly underrepresented."

The error, which was discovered in later June 2009 wasn't corrected until between September and mid-November 2009. The error actually was introduced into the company's risk model in early 2007, and led to investors losing a total of $217 million.

However, according to the US Security and Exchange Commission (SEC), after the error was discovered in June 2009:

"Instead of disclosing and fixing the error immediately, senior ARG [AXA Rosenberg Group LLC] and BRRC [Barr Rosenberg Research Center LLC] officials directed others to keep quiet about the error and declined to fix the error at that time."

According to this report last July at APBankers, the founder of AXA Rosenberg, Barr Rosenberg, and Tom Mead, director of research, resigned because of their role in the affair. Proves again the old maxim that the cover-up is as bad if not worse than the error.

The SEC found such actions constituted fraud, and in a settlement agreement with AXA, fined the company $25 million. The company, which neither admitted or denied the SEC findings, also agreed to pay $217 million to investors.  Furthermore, the company agreed to hire "... an independent consultant with expertise in quantitative investment techniques who will review disclosures and enhance the role of compliance personnel."

This may not be the end of it, though. A story at Court House News reports the Government of Guam Retirement Fund has brought a Federal class action lawsuit against AXA claiming that the $217 million being paid back to investors "is wholly insufficient to compensate investors for the full amount of their damages."

Story reports that the Government of Guam Retirement Fund seeks damages to be determined at a jury trial.

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An IBM Quantum Computer Will Soon Pass the 1,000-Qubit Mark

The Condor processor is just one quantum-computing advance slated for 2023

4 min read
This photo shows a woman working on a piece of apparatus that is suspended from the ceiling of the laboratory.

A researcher at IBM’s Thomas J. Watson Research Center examines some of the quantum hardware being constructed there.

Connie Zhou/IBM

IBM’s Condor, the world’s first universal quantum computer with more than 1,000 qubits, is set to debut in 2023. The year is also expected to see IBM launch Heron, the first of a new flock of modular quantum processors that the company says may help it produce quantum computers with more than 4,000 qubits by 2025.

This article is part of our special report Top Tech 2023.

While quantum computers can, in theory, quickly find answers to problems that classical computers would take eons to solve, today’s quantum hardware is still short on qubits, limiting its usefulness. Entanglement and other quantum states necessary for quantum computation are infamously fragile, being susceptible to heat and other disturbances, which makes scaling up the number of qubits a huge technical challenge.

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