Errors

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Oct 21, 2009 10:26 pm

how does your firm treat errors. i re cently underbought a stock and it cost me 1000 to make the client whole.. this i understand.

i also made an error that profited 600 hundred dollars and the firm kept it. i ask if they could use the 600 to offset the other and they told me no?
how do other firm handle this??????
Oct 21, 2009 10:59 pm

AGEWachaFargo does it the same way.  I always argued that the policy gives me the responsibilty of ownership, but not the reward.  They didn't buy it, and still don't.

Oct 21, 2009 11:58 pm

MS no longer charges brokers for errors and somewhat, WFA also.  They have been sued and settled for this among other issues.  It is against the law to charge employees for errors. And with all the red tape we are employees.  There will be no brokers at firms paying for errors soon.  Along with paying state registration fees and paying SA's out of your check, the latter two will also be history soon.

Oct 22, 2009 5:57 am
fritz:

MS no longer charges brokers for errors and somewhat, WFA also.  They have been sued and settled for this among other issues.  It is against the law to charge employees for errors. And with all the red tape we are employees.  There will be no brokers at firms paying for errors soon.  Along with paying state registration fees and paying SA's out of your check, the latter two will also be history soon.

 
Not true.  SB hasn't charged us for errors the last few years, but now that it's MSSB we're back on the old system of paying for them.  It does make some sense.  If we could profit from errors some creative brokers might intentionally make some.  I just wonder what happens if I make a MASSIVE error...say $250K.  I'm sure it's happened!  No one in management has ever given me a good answer to that one. 
Oct 22, 2009 7:05 am

UBS doesn't charge.

Oct 22, 2009 8:28 am

When you say the firm keeps the gains, do you mean the client - or actually the firm?

Oct 22, 2009 8:32 am
Wet_Blanket:

When you say the firm keeps the gains, do you mean the client - or actually the firm?





I bet he means the firm. Jones is (was?) the same way.



I made a huge error in trades at Jones one month after PDP. The offset gain was larger than the loss I caused (approximately 12k gain v. 9k loss). What did I get billed? 9k.



Never made a trading error after that. And that'll eat into your paycheck big time.

Oct 22, 2009 8:51 am

Fritz,

 
When will it become history for charging for registration fees?
 
 
Oct 22, 2009 8:54 am
NOVA:

UBS doesn't charge.

 
UBS doesn't charge for errors, per se. I think there is a percentage of revenue formula, as well as so many errors in a quarter. UBS stills charges for registration fees. I would like to know when they will stop charging for registration fees.
Oct 22, 2009 9:05 am

The next wave of lawsuits against firms who charge employees is on the radar screen for the legal beagles. Once the firms get crimped for making the mistake of charging employees for errors they should have been able to catch (i.e., better oversight) and it costs them, they will have to change.

 
Spiff etc. (Jones FA's), this is one area where the classic argument that its an industry wide issue are absolutely correct. What I objected to at Jones was the antiquated order entry system that prompted you if you made a type 1, type 2 error for stocks but didn't bother with funds. That cost me several times over 9 years. Pissed me off that they didn't provide the technology to inform if we made that error for funds.
 
As an indy with responsibility for oversight, it's all on me. Fortunately LPL does have the technology to catch most mistakes. In 3+ years  no losses...knock on wood.
 
 
Oct 22, 2009 9:49 am

Are you talking about type 1 or type 2 accounts?  Cash vs Margin?  


I've never tried to buy a fund in a margin account, so I tried.  You can't.  Don't know if it was always that way or not. 
 
 
Oct 22, 2009 3:32 pm

Spiff-


Yes. With stocks back in my day if I made a trade in type 1, and it was move to type 2 prior, I would be notified immediately prompting me do I still want to make the trade. With funds it was an automatic cancel and if I didn't see the cancellation, I wouldn't know. Errors would happen and I paid (due to change in market and usually several days/weeks later). I never got a good answer from management other than the standard bs...two people are responsible for errors, the rep or the client.


Maybe that policy or the procedure has changed now...Doubt it, but who knows Weddle is the man so maybe he dealt with this already.

Oct 22, 2009 3:40 pm

Spiff-


It never was on the buy, only the sell. Sometimes client would need cash (short term need) and I always had margin available, they would move the fund to type 2. The position would only move back to type 1 (as I recall you had to do something for that to occur, it wasn't automatic) if prompted . That's when the problem occurred in each instance. The GP's were unwilling at the time to recognize that their technology contributed to the problem, yet we were held liable.
 
Jones will change when forced to. If Mr. Thierman is reading these forums...he must be licking his chops knowing someday he's gonna cash in again.
Oct 22, 2009 4:20 pm

About three or four years ago, as part of a settlement EDJ, had to send clients letters offering them  free trades from one fund company to another. I had a client that had some funds margined,but he was sent a letter offering the free trade. Since Jones somehow overcame the rebating, and sent the letter making the offer, I would think that they also had the margin situation under control. I made the sells and buys. The sells went through, but I had a message on each buy saying that funds were not available. I waited a day or so to give them a chance to correct it, but when I called I got a real surprise. I was informed that the buy could not be done,(must own 30 days before margin) and I would pay the market loss. There was nothing in place to block the trades, and when I questioned them as to why they sent the letter to margined accounts, they had no believable explanation. They did claim that there was some info about this on the system, but they could not produce it. My attitude was the whole thing was their responsibility, since it was their lawsuit, and I was not being paid to provide the service. I felt that I was doing them a service which should not have been necessary. Bottom line, they charged me with four or five thousand in market loss, when they should have blocked the trade and contacted me, or not made the offer to the client in the first place. My next call was to my regional leader who got it handled eventually. That was the last straw for me, because I knew that I could not work with a firm that could not function as they should, and that had the attitude  they have.

Oct 23, 2009 8:08 pm

The "annual" Incentive plan my regional bank makes everyone sign yearly has a clause that if the rep subjects the firm to any loss the rep is responsible for reimbursing the firm.  What about arbitration settlements?  My firm charges the rep on any settlements they make.  We get 25-35% of the rewards/commissions but responsible for 100% of the losses.  We all have our arsses hanging out there.  

Oct 23, 2009 8:38 pm

UBS doesn't charge you for errors, they adjust your future commissions instead. Same difference.

Oct 23, 2009 8:44 pm

At Jones, I took a stock certificate for a company that I never heard of that a client wanted to sell.  I called to make sure that the CUSIP was legit, logged it in and mailed it.  Since the client was new and the stock was obscure, I told her it would take a couple of weeks until I could sell it.  After two weeks, I check the system and it showed "firm name" or something of the sort and then sold it. 

 
By chance, the next day I received a msg from Jones stating that the shares had been escheated to the state.  Since the shares had been sold they had to buy them back and I got tagged for the $200 loss.  I tried fighting, telling them that I did everything correct and went by their info but they wouldn't budge.  They said that I should have checked with the transfer agent.  They couldn't tell me who the transfer agent was with their Bloomberg system so even if I had known to do that, how would I have known?
 
Still pisses me off thinking about it.
Oct 25, 2009 7:57 pm

I argued the same thing, If we make money you get a larger percent, if we lose money I eat 100%. Looks like a win win for them, imagine that another example of the broker getting hosed. I dont know why they take taxes out of my check, I guess its a partnership with the higher percentage being mine. Now where is my percentage of the bonus money, and tarp funds.

Oct 31, 2009 11:48 pm

if the client noticed my mistake today.... it would have been a 1500 error in my favor and the firm would have kept the 1500 profit.   sucks either way