Wednesday, December 1, 2010

Another Update on Scottrade Fiasco

Just got off the phone with a compliance officer at Scottrade and I feel it is important to share what he told me, as it is quite important.   He could not get into specifics of my case because he did not work on it (although he did tell me their response was mailed today, which means I will get it next week, not this week), but he did say one thing that absolutely blew me away and that I still really can't fathom.  

I asked specifically about their company policy in terms of reversing trades - if they go in and reverse a trade, will they let the customers know?   He told me no - traders are made aware via statements and such, but are not told about reversed trades immediately via either email or a phone call.   I tried explain to him the complete recklessness of a policy like this to a trader, but he just said it was in the brokerage agreement and that was pretty much the end of our discussion. 

If you are a Scottrade user, I just think you should be aware of this policy.   Actually, I think you should be scared.  Basically, according to their policy, it is always YOUR responsibility to make sure THEY executed the trade correctly and didn't decide to reverse it later.  Don't do what I stupidly did and assume that when a stop loss is hit and you are sent an sell order confirmation by email that said the stop loss was hit and the stock was indeed sold, you don't have to worry about the position anymore.  Boy, what a fool I was.  Make sure you check your account often (theoretically you really shouldn't take your eye off of it ever) because you'll never know if they find an error with a trade and then reverse it on their own.   They certainly won't tell you about it - it's YOUR job to find out.

I could write more but I really don't know what to say right now - I am again just blown away by this.   I always thought I was relatively safe trading because I used stop losses religiously.  Now I realize that with Scottrade, stop losses really don't even matter in theory.   I do apologize for continuing to vent about this mess but I feel it is important to share and encourage you to share this information with others that may trade as well.  Hopefully no one will have to go through a similar situation again if others are made aware.   Take care.

4 comments:

menriquez said...

hey you have to remember...if they allowed customers to be able to change trades bu admitting mistakes, they would be outta business in two weeks!! it HAS TO BE *YOUR* RESPONSIBILITY to check the trade, otherwise unscrupulous traders would just constantly call in and say "oh you made a mistake i want my money back please"...


dont get me wrong i understand you pain...i once put a SELL order in and say -10000 shares, so i thought "hmmm that should +10000 SELL shares" and changed it, and ended up, of course, BUYing the damn stock!!!

i argued that was bug with their system and they kinda agreed that it was confusing, but they could not change the order...BUYER BEWARE!!!

Mac said...

No offense, but your situation is completely different in my opinion. You made a mistake in your order. My order was placed correctly, then reversed sometime after I got a confirmation email that the sell order was executed.

I never asked for the trade to be reversed. I was not the one changing the trade. Maybe I am mistaken, but I want a broker that will at least inform me when a trade is reversed - I don't think that's out of line at all.

CW, Portland OR said...

My question....Are the other companies doing anything differently? Before you change....

MarshalN said...

How much is involved? Would you have any luck in small claims court?