Wednesday, November 24, 2010

State of the Stock Market - 11/23/10 - "I Am Through With Scottrade"

No market talk today because I am about as blown away as I could possibly be with the brokerage firm I use, and I wanted to share my experience so as to hopefully prevent others from getting involved with the same sort of problem I experienced today.  

A few weeks ago, I posted about some weird stop-loss activity in my IRA.   I was stopped out of two positions in BORN and ASTI but only in opposite accounts, and only at the lows of the day.   I emailed Scottrade to inquire about the situation and they said they will be in contact soon.   I never heard back from there and I guess really didn't think much about it - I just figured that there wasn't anything that could be done and I was out of luck for the time being.  

I got home today and had a message from my local Scottrade branch explaining how they were just made aware (some two weeks after the incident) of some questionable trades and he wanted to follow-up on this issue.   The message also informed me that one of the trades was actually reversed.   I said, "What?"

You see, Scottrade never told me the trade was reversed.  No phone call.  No email.  Nothing.  On November 8, I was stopped out of ASTI at $4.37.   On the same day, they put the original position back into my account at $4.37.   IF I was made aware of this, I wouldn't have a problem.   Unfortunately, that's where the problem comes in to play.  

Somehow I was supposed to know that this happened I guess.   Somehow I was supposed to log into my account every day (which is not something I do anyway because I don't trade my IRA very often) and check to see if the position was reversed.  I never asked for it to be reversed - I simply wanted some details about the bid-ask at the time of the trade and what the original stop-loss orders were.  I wanted an explanation.  Because I am stupid I guess, (I really don't know what to think right now), I didn't and I am now a proud owner of ASTI at its current price of $3.40, after "rebuying" it unknowingly at $4.37.

If you follow my blog, you know that I don't mess around with losses too much.  I don't hold stocks longer that they need to be held - I keep my stops and let them work.  Often times my stops are too tight if anything.   Now I am sitting on a position that is 22% underwater.  Actually, I did sell it today at $3.39, so I am taking a loss of 22%.  Thanks Scottrade!  

The best part in talking to the broker when I called him back was that he said he's never seen something like this really happen, and that he doesn't know why the compliance officer didn't contact me or him at the local branch.   I asked him if anything could be done, but (without saying it directly) he said I am basically out of my money.   I can "draft a letter" (his words) and send it to the compliance department and perhaps something can be done.   That gives me a lot of confidence, because Scottrade's compliance departement has been so on the ball through this whole thing. 

I guess I should count my blessings that they didn't reverse all of my trades over the past few weeks, because then I would be sitting on potentially even bigger losses.   Perhaps this is something that happens a lot and I am getting worked up over nothing.   However, I am pretty ticked off right now, not because of the lost money, but because I had no control over the lossed money.   If I lose money on my own accord, I can handle it.   If someone else screws up and costs me money, I have a bit more difficulty handling it.   I guess I better check in to all my accounts on Friday to make sure nothing else was reversed without my knowledge. 

I guess I will now start the process of looking for a new brokerage for my main account and my wife and mine's IRA.   If any readers have recommendations, feel free to share.   This was kind of a rant (I wonder if you can tell) so if it is a bit incoherent, I apologize.   If you feel inclined, please share this story with others, because I don't want anyone else to have the problems I just went through.   Disappointed doesn't begin to describe how I feel about the Scottrade brand. 

I do hope you all have a great Thanksgiving - short session Friday, so be careful - it will likely be choppy.   Take care.


The Average Jay said...

Go to TradeStation.

SAL M said...

I'm with Tdameritrade and have had no problems for the past 2 years. Great costumer service, but if one is an active trader the commissions could be too at 9.99.

With Interactive brokers you could end up paying way less on commissions and i heard they are a promiment brokerage house offering many market options.

I still wont switch to I.B. yet since i am happy at TD

Anonymous said...

10 years with OptionsXpress mostly trading stocks in IRA. Two bogus executions both of which were reversed within an hour after I emailed. Excellent customer communication, live chat, auto email notification, auto text notification. $9.99/trade for stock.

Anonymous said...

Sorry to hear about your broker issues....went to IB last year, and service is great, mentioned this a while ago. Commisions way down (50% less than TD), and I activeily trade.
You will not regret the switch.


Jeremy said...

So sorry to hear about that. I like optionsxpress because of their excellent customer service, and I use IB too for the low transaction costs

Mac said...

Thanks for the comments - I will look into all of these.

I wrote an email to Scottrade today to check one last time on this issue - this is the response I got back -

"Your recent message or response has been forwarded to the Scottrade Compliance Department for review. We appreciate your patience as your question or complaint is being researched. You will receive a written response via U.S. Mail directly from our Compliance Department in approximately seven to ten business days.

Please let us know if we may be of further assistance."

Wow, that makes me feel better. It's the same email I got when I sent the original question on the 8th - of course, I never heard back over two weeks and WAY too late for me. their customer service sucks.

Anonymous said...

wow, sorry to hear that. Been with Scottrade for, shoot, 5 or more years and never a problem.

Our branch manager is GREAT, everytime i have complained about something, they have done or tried to accomodate me.

hope it works out, you'll make it back, as i am sure u know! :D

Anonymous said...

that is plain fugly on scottrade. forgot abt them long ago when i switched to ThinkorSwim (for free platform/options) and IB (options/stocks) and a new acct with Lightspeed (just for reduced comissions)

positiontrader said...

That's simply awful and unacceptable. For an active trader, this is the stuff nightmares are made of. And your branch manager should take up the case, rather than make you send mails. I hope it gets sorted out quickly Mac. Good Luck!

Doctor Stock said...

Sorry to hear of your experience... unfortunately, these are not isolated cases. Best of luck in finding a new broker.

muckdog said...

Sorry to hear. That truly sucks. I haven't had any trouble with IB or Fidelity.

Anonymous said...

pls update us if scottrade would compensate your loss.

me from hongkong, broker recorded all emails/ orders from phonecall etc. they should bear your loss.

Anonymous said...

pls update us if scottrade would compensate your loss.

broker recorded all emails/ orders from phonecall etc. they should bear your loss.

Anonymous said...

I trade with Siebert. The commissions are high ($14.95), but because I have a large account my highest priority is avoiding the nightmare you have experienced. Just one brokerage mistake like that can wipe out years of commission savings. In ten years with them, every complaint has been resolved to my satisfaction the same day.

And I am a complainer.

Anonymous said...

Oh my God.

I recently purchased 20,000 shares of ONP, and can only imagine the heart attack/stroke I would experience under similar circumstances.

No problems at Schwab.

Whatever you do, Mac, get out of there. This was a giant warning that your entire account is at risk.

Unfortunately, that self-serving account form they make you sign makes it virtually impossible to get any satisfactory resolution, but you can at least have the satisfaction of leaving.

bangwhiz said...

I'm with Optionshouse and very pleased with it. Low prices can't be beat. It's a cash only site, but rates make it worth the trouble. $2.95 a trade and .005 on shares lower than $2.00. Customer service has been super. I liked Etrade, but I wanted to escape the 9.95 trades for Optionhouse's 2.95 a trade. I trend trade a lot and trade cost is big with me.

Your experience with Scott Trade is unforgivable.I would be so mad I would be radioactive.