Something your firm does as well?
There was a trade correction for my commissions this month. The full weight of the correction will be deducted from my paycheck; that is to say, not that part of the GDC from which I netted but rather the whole gross commission correction. (FWIW, this correction was not large nor is this a recurring theme for me.)
Please - without flaming my firm or myself - I'm wondering if other firms handle things in this manner. Is this consistent with other firms? All things considered, it seems as if the firm has required me to pay back both what I earned, and what the company earned on this transaction.There was a thread about this topic in the last couple of weeks. The general consensus was that most, but not all, firms will charge you for your errors.
The bad thing is that if you would have made a mistake that there was a gain on, then the firm wouldn't have shared that gain with you. So, you could have screwed something up that needed to be corrected and the firm made $1000 on the deal because of market timing. They keep it. But if the very next day you have to correct something else and you lose $1000 because of the market, it's coming out of your paycheck. Not just the money for the correction, but they'd also take the gross away because you didn't actually earn it. The system has no memory. Sucks to have to learn those little lessons the hard way.I must have missed that thread.
Mind you, I have absolutely no problem with being charged. I do have a problem with the company benefitting from it ... especially when their slice of the pie is so large to begin with. OTOH, if this is an industry standard ... so be it. Tough lesson indeed. [edit] in retrospect, it makes sense. There needs to be a penalty for making mistakes or people would do such things with impunity.[quote=Spaceman Spiff]
There was a thread about this topic in the last couple of weeks. The general consensus was that most, but not all, firms will charge you for your errors.
The bad thing is that if you would have made a mistake that there was a gain on, then the firm wouldn't have shared that gain with you. So, you could have screwed something up that needed to be corrected and the firm made $1000 on the deal because of market timing. They keep it. But if the very next day you have to correct something else and you lose $1000 because of the market, it's coming out of your paycheck. Not just the money for the correction, but they'd also take the gross away because you didn't actually earn it. The system has no memory. Sucks to have to learn those little lessons the hard way. [/quote] I think you're missing what he's saying. He made $2,000 gross and they take $2,000 net. They make a 65% PROFIT. It is fcked. There will be a lawsuit on this at some time and I will be in it. And yes, all firms steal from you in this way. In Ca it has been outlawed to charge for errors, so the crooks figured out a way to reduce your grid if you make errors. At least they take gross from gross though. I have no idea how a group in finance ever let this happen and why there hasn't been a lawsuit already!FYI, it is illegal for any firm in the country to charge you for errors that are incurred during the course of normal business. They can charge back if a trade error erases the trade, but it must be taken back the same way it was given (gross vs net)…
That's why there will be a lawsuit. That is not the way it's done. I had a blowout at Merrill 3years ago and one at Wachovia last year. Basically told " this is the way we do it."FYI, it is illegal for any firm in the country to charge you for errors that are incurred during the course of normal business. They can charge back if a trade error erases the trade, but it must be taken back the same way it was given (gross vs net)…
Yep, it was industry standard for a while, but the big players lost their class action suits first- now they are going after the smaller firms. Any firm still doing it should be shut down for flying blind…
Yeah, that’s f’d up. There is no regulatory reason to charge a FA on gross.
I'm not misunderstanding. I know how it works. Evidently you don't.
This isn't a net vs gross discussion. We're talking actual dollars with this one. Jones didn't make any money on this correction. They covered their loss. Here, I'll spell it out for you: Lock enters order for 100 shares of GE @$20. Jones goes out and purchases 100 shares of GE for him @ $20. The firm uses it's own capital to buy the shares, so they're out $2000. Lock then cancels that trade, but the price has gone down to $17. So, Jones sells those 100 shares back @ $17 and get back $1700. So, they've spent $2000, but only got back $1700. That's the loss that Lock is expected to make up for because it's his error. They would have credited his GDC for the $50 in commissions, but they'll take that back out because he cancelled the order and didn't actually earn the commission. So commission doesn't come into play in this instance. It's just a $300 mistake that he has to cover. I know, I know you can argue that they're using his net to cover the loss. You'd be correct. But they're not making any money on the deal. They're covering their loss. I'm not quite sure how your math works out to a 65% profit for the firm. That must be good left coast liberal math. If you can show me how that math works, I'd love to see it. So, which is worse, the firm stealing from the FA by making them cover the loss on their mistake or the FA stealing from the firm by not having to cover the loss on his mistake? It sucks, but I don't have a problem with covering a loss on a trade that I screwed up. FYI, Jones is pretty decent about working with you if the loss is a big one. The area teams know that I had a $500 loss one time that they let me split over a couple of months. So, at least they steal it from you in little pieces.The way I read it made it seem that he covered the realized loss of the correction + lost the gross commission on the sale (not the net commission).
I'm now confused by the original post.At our office, when it was AGE, there was a pool that was created from funds made by mistakes. If the pool was positive and you made a mistake the pool would cover it. Otherwise you had to pay. Still, many times my very awesome manager would just have the office P&L eat it. Now if there is a loss you pay it, period. If there is a gain it goes to the firm.
UBS changed policy to the firm eats all errors. (that lawsuit and these pussies scared).
It got so expensive so their slime bag lawyers worked hard for a solution.
They came up with a plan that if your errors (gains and losses) are above a % of your gross for quarter , then the hit your payout. The first hit was at 2% of gross and it hit your net 2% up the absolute value of the errors. Typical back handed pussy UBS
[quote=BigCheese]
FYI, Jones is pretty decent about working with you if the loss is a big one. The area teams know that I had a $500 loss one time that they let me split over a couple of months. So, at least they steal it from you in little pieces. I would question anyone who would be willing to write their firm is decent when you admit they steal from you. What a commentary on you Spiff...to actually print that you endorse them or think they are ok because they take it back from you in little pieces. I have said it before and I will say it again. Get out of dodge before you risk your reputation and your career. If Jones feels in this era that its okay to take from reps for mistakes that they could catch beforehand (remember you are not the principal taking the oversight responsibility) they don't have the technology or bucks to fix it, they have you and all your cohorts to collectively underwrite the risk. Maybe now that they have saved tens of millions with the UK gone, they can take on another hole in their model. Unless they continue to spend the bucks on growth and you are back to square one. My guess is when it hits them in the pocketbook...they'll change. Do you ever read your signature at the bottom. Talk about intelligent life... [/quote] And I would question anyone who needs emoticons placed in a sentence to recognize a joke. Again, more proof that you're so jaded against ANYTHING I say that you can't even recognize a joke when you read it. You're truly pitiful. Just for you, every time from here on out I'll use when I'm making a sarcastic comment or when I'm trying to make a joke. Perhaps then you'll recognize it for what it is. We've had this conversation before and I'm still not sure I understand what in the world you're talking about. This is a pretty simple thing to try to understand. FA makes a trade. FA has to correct the trade. Jones is not at fault for the FA having to correct the trade. But, Jones does have it's own money on the hook for the FA and his client. So, if the FA screwed something up, then he should pay for it. I'm not sure what you're expecting Jones to "catch" but they're not mind readers. I placed a trade this morning for 100 shares of stock for a client. It was a buy. How does Jones know if it was really supposed to be a buy or if it was actually supposed to be a sell? They don't. What era are you talking about? Is this the era of no responsibilty to fix our own mistakes? So, was it only in the 1990's that it was OK for the firm to require you to man up for doing something wrong and costing the firm money? I get it that you think that there is something in our system that could be catching our mistakes, but Jones hasn't spent the money on that project. Perhaps if you would explain it a little better to me I could put it in the Suggbox so that Jones can fix the system so that nobody in the firm ever makes a mistake on a trade again. You might want to type slowly since I'm no so intelligent.Spiff-
I could be wrong, but I thought you had your Series 24. Even if you don't the era of responsibility falls on both the FA and the manager who oversees you. If you don't have safeguards or policies in place (which Jones doesn't) then someone has to take the fall. What I have been trying to get through to you without a lot of success (notice no emoticons) is when you are and employee which clearly you are, you are not liable for mistakes. It doesn't matter whether your are selling clothes or securites and employee is an employee. The laws aren't any specific to any type of business. When Jones pays out millions to Theirman and his cohorts (he's the attorney who sued many firms for a variety of reasons) again they will change. Other firms have band aid approaches to keeping their liability to a certain percentage, I doubt they will continue once the lawsuits start...and they will. And as for intelligent life. I think you have been spending way too much time in St. Louis. It might be time to migrate to one of the coasts to get a little clearer picture of what the world is really like!Hard for me to spend time in another place than STL, given that I live here and so does my wife and children.
I do have my 24. It's been a decade since I took the test and I only have to do CE something like every 3 years. It's not something I utilize regularly. What safeguards is Jones supposed to have in place? I guess that's the part that I'm not getting from you. You keep talking about "safeguards and policies" without defining them. Therefore, I don't know what you're talking about. Like I said before, if you'll tell me what you're talking about, I'd be happy to send the suggestions in to Weddle and let him know how we can improve the firm. I'll even tell him the suggestions were from you.[quote=LockEDJ]
There was a trade correction for my commissions this month. The full weight of the correction will be deducted from my paycheck; that is to say, not that part of the GDC from which I netted but rather the whole gross commission correction. (FWIW, this correction was not large nor is this a recurring theme for me.)
Please - without flaming my firm or myself - I'm wondering if other firms handle things in this manner. Is this consistent with other firms? All things considered, it seems as if the firm has required me to pay back both what I earned, and what the company earned on this transaction. [/quote] This happened to me and I was pissed. We were selling some stocks for an individual. Everything went through just fine, then 3 days later I recieved a wire that I will be deducted $300 from my commissions. Come to find out i placed a trade for one of the stocks using the correct symbol but because they were going through a spinoff (that Jones did not mention ANYWHERE on our system) they sold the stock noting that the customer didn't own it, when they did. Then when they bought it back charged me $300!!! That will get your fired up.There are many stories where the FA's have paid. All I remember was a GP on a nice diversification trip who commented on my concern back then, that only two entities could pay for the mistake. Either the client or the FA.
You don't even have E&O at your firm. They self-insure according to them, what they do is transfer the liability away as much as possible.
Just and FYI, Jones does pay once in a while. I went to arbitration with a deceased client's third generation heir and I was exonerated but Jones paid 54K and the reason... failure to supervise. Jones has a responsibility to adequately supervise and they are purposely avoiding at your expense, probably because of cost. They will be forced at some point to change and when they do, your 100 share orders will probably be viewed by someone prior to execution, and you may have to substantiate your order somehow (way beyond my comprehension) so those last minute orders before the close my be in jeopardy.
You'll have to post after hours now... Unless you don't have many trades to make.Do you seriously think that a company the size of Jones is going to force me, and the other 11,000 FAs, to substantiate a 100 share order every single time? Not hardly. The manpower requirement would be huge. And unnecessary.
There's a HUGE difference between the arbitration scenario you're talking about and an FA placing an order incorrectly. You go to arbitration for suitability, not for stupidity. You go to arbitration because someone thinks you did some illegal or unethical. People don't take you to arbitration because you bought 1000 shares of T instead of 100 and then corrected it. It think you're trying to make your point incorrectly. I'm talking about a procedural error, which isn't an S24 issue. You're talking about failure to supervise, which is. Apples to oranges. As to E&O insurance, Jones is very clear that they carry insurance on themselves, not the FA and if the FA screws something up and the client loses, he will be expected to pay. They don't make a suggestion as to whether or not we should get it. They do however say you can get it if you want, but if you get it they expect you make sure the level of care you take with your clients doesn't go down.[quote=Spaceman Spiff] Do you seriously think that a company the size of Jones is going to force me, and the other 11,000 FAs, to substantiate a 100 share order every single time? Not hardly. The manpower requirement would be huge. And unnecessary.
There’s a HUGE difference between the arbitration scenario you’re talking about and an FA placing an order incorrectly. You go to arbitration for suitability, not for stupidity. You go to arbitration because someone thinks you did some illegal or unethical. People don’t take you to arbitration because you bought 1000 shares of T instead of 100 and then corrected it. It think you’re trying to make your point incorrectly. I’m talking about a procedural error, which isn’t an S24 issue. You’re talking about failure to supervise, which is. Apples to oranges.
As to E&O insurance, Jones is very clear that they carry insurance on themselves, not the FA and if the FA screws something up and the client loses, he will be expected to pay. They don’t make a suggestion as to whether or not we should get it. They do however say you can get it if you want, but if you get it they expect you make sure the level of care you take with your clients doesn’t go down. [/quote]
Showing my ignorance… Jones didn’t pay for E&O???
And I’m not even joking that I didn’t know that.
Son of a b!tch!!! And here I was, over my anger at Jones.
Juck Fones!
Spiff-
I'll take a stab that at some point in the future, after they have paid huge class action dollars, they will figure out how to manage every keystroke when it comes to orders.You seem to be so strident that they can't manage your orders but they have the technology to know where your surf on their nickel. Calvin is squirming every time you respond. You are either so naive or so far up the GP's arse you can't see out of it. If you really did pass your 24 you would know that the ultimate responsibility lies with your manager. Why don't you take the time to ask someone who has that responsibility where the line is drawn. As to E&O insurance, Jones is very clear that they carry insurance on themselves, not the FA and if the FA screws something up and the client loses, he will be expected to pay. Spiff- Are you suggesting as an employee you are not protected representing their firm? If that is true...why wouldn't you carry your own E&O? Unless you have nothing to lose...
Moraen - No, EDJ didn’t have E&O insurance on you. They have it on themselves. If you would have done something illegal, they would have thrown your butt under the bus. They have lawyers on retainer to cover the firm’s liability for your office (failure to supervise, etc), but those lawyers will make it very clear to you that they represent the firm’s interests, not yours.
I think we're talking about two different things here. I think you're talking about E&O that would cover my butt if I got dragged into arbitration. The client would be saying that something I did, or didn't do, cost them money in some form or fashion. I think this original thread was talking about the FA screwing up a trade and the firm fixing the problem. There was a cost to the firm, not the client, and therefore the FA needs to cover the cost. It has nothing to do with client losses or potential arbitration. I think that's pretty clear at Jones. You get taken to arbitration, Jones will provide you with legal assitance as long as you didn't do something you knew was illegal. You screw up a trade, it's coming out of your pocket. You do something illegal, you'd better find yourself a good attorney that represents you, not the firm. Instead of just simply telling me that Jones is headed for a class action lawsuit (for what I'm still fuzzy on), or ranting about my S24 and ultimate responsibility, why don't you tell me what YOU think we should do to fix the gaping holes in our supervision of the average FA. I find it interesting that you are long on accusations, but short on solutions.Well i didn’t screw up a trade. It was on Jones, but somehow I got charged. Sucked.
[quote=Ronnie Dobbs]Well i didn’t screw up a trade. It was on Jones, but somehow I got charged. Sucked.[/quote]
Of course YOU didn’t screw it up … when have you ever been wrong or made a mistake, jesus, i mean windy?
All the time asshole. I placed the trade correctly.
Spiff-
Take off your rose colored glasses for just a moment. You are an employee. You can not legally be held responsible (even if you make a glaring mistake). Your employer should carry E&O to cover that. They have chose NOT to insure that liability. Someday a disgruntled FA will take Jones to court and the courts will find (just as they have with overtime lawsuits) that as an employee you are not responsible, the firm is. To date, no one has taken Jones to court on this issue...yet. But as soon as they do and the GP's pay gazillions out, you will either have sufficient E&O to cover your mistakes, or better supervision or both. As I stated to you before, this is a legal discussion, and I am not a lawyer....but as far as I can tell, there is no differentiation between what type of industry (just whether or not you are an employee or employer)so Mr. Thierman is going to be on the prowl no doubt to take on the firms on this issue. If I were a GP, I would be looking ahead as to how to deal with the next change. Technology will play a part in protecting the firm from glaring mistakes, it will have to adapt. At LPL, as an OSJ, I have the liability. If a trade is wrong, I pay, but I am the person signing off on my trades. Take it up with your IT dept, or maybe your managing partner. One point I would like to bring up regarding your clarification of who the firm protects. In that arbitration that I went through the lawyers had no problem telling me that I was a pawn in the process and their mandate was to protect the firm first. It didn't make feel real good going through the process knowing that they could have settled the claim, I would have a black mark on my U4, and their was absolutely nothing I could do about it. As it turned out I was fine, but Jones paid because they failed according to the arbitrators to supervise. The reality is Jones doesn't care about you and they certainly didn't care about me except that I hit the bogey every month. They put us on the front lines without any armor, and if you get hauled into court the lawyers are hired by the firm to protect the firm. Hope this doesn't happen to you but in my experience somewhere along the way it will. Spiff...how exactly are you going to protect yourself? When you get busy, when the phones are ringing off the hook, that's when problems occur. Now you have time...someday (I am assuming you will survive) it will happen to even the best brokers.windy/ronnie, if you are truly in the right you need to call trade corrections or your FSD to get your money back. If you don’t call them on it they will blow you off. Trust me, I have had to do this twice so far this year.
This happened back in ohhhh…March. I already called them. They said, “It was sort of both of our mistakes, but since it’s your branch you have to eat it”. I was pissed. It was TOTALLY their fault. The client had the stock. I sold it. Their system (or the trader) screwed up by not recognizing the stock because they were doing a spin off and sold (un owned) shares. Then when they bought them back it was a $300 charge to ME! lol Another one that pissed me off was. I bought a stock and screwed up on the quantity. Was my fault, but when Jones sold it, it was about $12 per share more than when we purchased it. Jones made money on it, but guess who had to pay a $20 (trade error). I was like WTF?
stays out of my way (RJFS).
[quote=BigCheese]Spiff-
Take off your rose colored glasses for just a moment. You are an employee. You can not legally be held responsible (even if you make a glaring mistake). Your employer should carry E&O to cover that. They have chose NOT to insure that liability. Someday a disgruntled FA will take Jones to court and the courts will find (just as they have with overtime lawsuits) that as an employee you are not responsible, the firm is. To date, no one has taken Jones to court on this issue...yet. But as soon as they do and the GP's pay gazillions out, you will either have sufficient E&O to cover your mistakes, or better supervision or both. As I stated to you before, this is a legal discussion, and I am not a lawyer....but as far as I can tell, there is no differentiation between what type of industry (just whether or not you are an employee or employer)so Mr. Thierman is going to be on the prowl no doubt to take on the firms on this issue. If I were a GP, I would be looking ahead as to how to deal with the next change. Technology will play a part in protecting the firm from glaring mistakes, it will have to adapt. At LPL, as an OSJ, I have the liability. If a trade is wrong, I pay, but I am the person signing off on my trades. Take it up with your IT dept, or maybe your managing partner. One point I would like to bring up regarding your clarification of who the firm protects. In that arbitration that I went through the lawyers had no problem telling me that I was a pawn in the process and their mandate was to protect the firm first. It didn't make feel real good going through the process knowing that they could have settled the claim, I would have a black mark on my U4, and their was absolutely nothing I could do about it. As it turned out I was fine, but Jones paid because they failed according to the arbitrators to supervise. The reality is Jones doesn't care about you and they certainly didn't care about me except that I hit the bogey every month. They put us on the front lines without any armor, and if you get hauled into court the lawyers are hired by the firm to protect the firm. Hope this doesn't happen to you but in my experience somewhere along the way it will. Spiff...how exactly are you going to protect yourself? When you get busy, when the phones are ringing off the hook, that's when problems occur. Now you have time...someday (I am assuming you will survive) it will happen to even the best brokers.[/quote] Perhaps you can educate me a bit. I don't have E&O insurance and have only briefly looked into it. My recollection was that it is there not to cover mistakes that you might make in trading, but mistakes you make that land you in arbitration. A trade error that results in a loss, but not arbitration, wouldn't be covered by E&O insurance. And if I remember right, there was a per incident deductible. So if you're taking a $30 trade loss because you sold too many shares and had to have your back office fix the mistake, E&O won't cover it. Why is it that you keep talking about arbitration and failure to supervise and equating that with me placing a trade for an incorrect amount of shares? Don't you see that they are two completely different discussions? You really need to stop preaching to me about how bad a company EDJ is if you don't even understand everything that they do for me. Of course they have E&O insurance on the firm to cover themselves if I get taken to arbitration. Of course they're going to distance themselves from me if they find through arbitration that I did something illegal or unethical. But up to that point, they'll go out of their pocket to try and protect the firm and my interests. I've not been through arbitration, but I've been through a situation that could have ended up there. Jones spent a lot of money on attorneys to make sure that I had good representation in that situation. I'm still not with you that Jones is responsible for my mistakes. They still can't read my mind or listen in on the conversation with a client. They don't know, and won't ever be able to know before the trade is placed, what my client actually told me to do. When you're placing a stock trade and it fills in 10 seconds or less, there's not a system in the world that will allow someone who wasn't in the room with me to catch my mistakes. If I make one, and I do every so often, I expect to pay for it. If I worked at a grocery store and my drawer ended up $20 short, it means I didn't do my job correctly and it's more than likely going to come out of my paycheck that week. If it becomes a habit, I'll probably lose my job. I'd feel grateful if my employer patted me on the back and said, it's OK, it happens, don't worry about it this time, but don't let it happen again. I'm not sure why anyone in their right mind would take Jones to court over trade errors. But then again, most attorneys who would take on a case like that aren't in their right mind. I guess the days of personal responsibility are gone.[quote=Valhalla]stays out of my way (RJFS).[/quote]
They look better and better every day…
Spiff-
If you really need further clarification consult with an employement lawyer. Or perhaps check the FINRA website.You must be too busy today to actually answer my question. So, I checked the FINRA website. It says that firms are required to have in place a "supervisory system and written supervisory procedures reasonably designed to ensure that such orders placed into trading systems are not entered in error or in a manner inconsistent with NASD rules." Well, my assumption is that Jones has satisfied the regulators that our order entry systems and supervisory systems are reasonably designed to stem the number of erroneous trades placed. If they hadn't, we wouldn't be able to place any trades. I think that word "reasonably" is important too. I don't believe FINRA expects a supervisor to be a mind reader.
I couldn't find any specific references to trade corrections or errors and omissions. Not that it's not there, I just didn't want to waste any more time looking. 3 hours was enough. So, evidently FINRA must not have a ruling on whether or not it is against the rules to charge us with losses on trade corrections. In that case, it's more than likely up to the rules of the state. Just FYI, I've tried a couple of different ways of entering trades in our decades old green screens that might actually cause a problem. I've tried selling shares short (sytem tells me there aren't any of those shares in that account), placing a trade for 1,000,000 shares (it tells me the trade is more than $100K and asks if I want to continue), buying a MFD in a margin account (can't do it), and some others. Even a basic order has two different times that you have to look at what you are buying/selling and verify that the order is correct. I'm just not understanding what different supervisory solutions are out there, short of a Vulcan Mind Meld with my FSD, that can stop trade errors. But, you're the EDJ expert, you should know off the top of your head what we can do to fix it.How do you Jones guys get appointed with other carriers if you don’t carry E&O?
What do you answer on the appointment paperwork where it asks who your E&O is carried through and what amount?But, you’re the EDJ expert, you should know off the top of your head what we can do to fix it.
Spiff- You are the Jones expert on these forums. You know it all, and you have been designated chief spokesperson on these forums. Finra has rules about supervision, and you are probably correct its up to the states. As you know I live way left of Missouri where employees are treated much differently. Suffice to say this. You pay enough for the firm to pay for all of your mistakes ten times over. They haven't been forced yet (although some much larger firms are taking a much different position like UBS, MSSB )and its only a matter of time. If you need to be correct today...consider buying a lotto ticket.[quote=BerkshireBull]How do you Jones guys get appointed with other carriers if you don’t carry E&O?
What do you answer on the appointment paperwork where it asks who your E&O is carried through and what amount?[/quote] Jones does all the paperwork for us. We just request the appointment from Jones.Source URL:https://www.wealthmanagement.com/forums/whats-firms/something-your-firm-does-well