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The Missing Zeros

It was a simple clerical error, but it could be the most expensive typo of all time. In 1978 Prudential, the largest insurance company in the U.S. loaned $160 million to United States Lines, a shipping firm. As part of the deal, Prudential got a lien on eight ships.

In 1986 U.S. Lines went into bankruptcy proceedings and started selling off assets. Prudential said it was owed nearly $93 million, the value of the lien, from the ships? sale. Or so the insurance company thought. A close look at the lien documents disclosed that someone had omitted three little zeros, thus entitling Prudential to $92,885 only instead of $92,885,000.

The mistake loomed larger when McLean Industries, parent firm of U.S. Lines, sold the ships for $67 million. In a settlement approved later by a federal court, McLean agreed to give Prudential the proceeds from the sale of the ships-minus $11 million. That was the price McLean demanded for disregarding the missing zeros.

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