Skip navigation

Client changes mind

or Register to post new content in the forum



  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Jan 23, 2006 11:15 pm

client purchases 100K mutual funds A shares paying 4% sales load.

two business days later they claim they want to cancel trade because they weren't told of the upfront charge.

client signed all supporting paperwork.

what are the client's options?

who takes any losses?


Jan 23, 2006 11:32 pm

The client can either keep them or take the hit.

Tell us more about the "supporting paperwork."

Jan 24, 2006 2:25 am

A similar thing happened to a guy in my office today.  He bought some tax-free ETF's last week and the client changed his mind over the weekend.  He actually told the client he would try to get his trade canceled.  I think he's worried about losing the client.

Jan 25, 2006 1:33 am


The client’s options are numerous:  They
can file a written complaint that may result in a “yes” answer on your
U4.  They can file an arbitration complaint that may result in a
"yes" answer on your U4.  They can file a complaint with a
regulator (SEC, State, SRO), which could result in an investigation of
you — or the regulators may initiate an investigation upon learning
of the allegations in the client’s complaint.

On your end, you may be setting forth a standard "buyer's remorse" case in which you may well be able to present strong defenses against the client's claim of non-disclosure of risk.  Further, the signed paperwork may bolster your position.  You might also be able to counter-claim against the client in any proceeding alleging fraud and defamation.

Nonetheless, the course most BDs would likely take here is to cancel the trade and attempt to ding the RR for all/part of the losses (and reverse the commissions).  The "upside" for the firm is one busted trade. The downside for the firm is the entire mess detailed in the first paragraph (plus legal fees).  As you can see, the math is compelling from the firm's perspective and the unfairness of this type of customer "extortion" is infuriating from the RR's perspective.

Life sucks.  Then you die. 


This happened to me several years ago, after 2 days resulting in a couple of hundred points dropping in the market.  Firm busted the trade and the firm split the "error" with me...cost each of us just over $2,000.  Then we asked the customer to find another firm or work with the discount desk.
Feb 6, 2006 1:51 am

That really sucks…sorry to hear it Scrim…

Feb 6, 2006 1:14 pm

Just curious after two days how did he "find out" about the load? If he wasn't informed, it would of been to soon to receive confirmations?