Expert Advice Needed

yasser · 1 Expert Advice Needed Thu Feb 16, 2012 11:45 pm

yasser

Senior Equity Analytic

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I invested 300,000 and traded on margin as well, but my buying power kept increasing and I kept buying not knowing exactly what it was. One day the broker called me and said I have bought in excess, and my power was shown due to system error and need to sell. The broking firm kept quiet until the maket dropped down and sold my entire portfolio.
Now I have to pay the broking firm more than 300,000 its almost 500,000 and with no shares in the portfolio.
1. Whom can I report this to? - I dont have money to pay this amount
2. Can they take legal action - it was their system problem.

This could happen to new comers who would use margin trading.

NEED EXPERT ADVICE.

krishan Aakash · 2 Re: Expert Advice Needed Fri Feb 17, 2012 12:10 am

krishan Aakash

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dear brother........u didnt check the account detail forms and balance sheets.system error isnt matter for broker company.but it is good matter to discuss.but u should touch every moment with your broker if u deal with share market further more.my option is you should have to pay the due amount.if u have to talk with the broker company regarding the matter u can ask them for installments for this due amount.some times they can come with u in legally if u wont pay this.very sad situation..i am sorry about u.

Redbulls · 3 Re: Expert Advice Needed Fri Feb 17, 2012 4:55 am

Redbulls

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@yaser
If you post advice needed, I would have advice you, even others might also.
Your heading says expert advice needed,so only kishan is suitable.

Gaja · 4 Re: Expert Advice Needed Fri Feb 17, 2012 8:52 am

Gaja

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yasser wrote:I invested 300,000 and traded on margin as well, but my buying power kept increasing and I kept buying not knowing exactly what it was. One day the broker called me and said I have bought in excess, and my power was shown due to system error and need to sell. The broking firm kept quiet until the maket dropped down and sold my entire portfolio.
Now I have to pay the broking firm more than 300,000 its almost 500,000 and with no shares in the portfolio.
1. Whom can I report this to? - I dont have money to pay this amount
2. Can they take legal action - it was their system problem.

This could happen to new comers who would use margin trading.

NEED EXPERT ADVICE.

Its really sad to hear you friend, but i feel you can't complain to anybody, also they have the right to take the legal action against you to recover the balance, i feel the issue was you are not only on margin but on the leeway margin as well.

If you can PM answer for these question, i can think of options available to you?

01) Are you broker credit or margin Credit?
02) If on broker credit did you have a written agreement?
03) If you are on margin credit, did the margin provider allowed to buy above and over the Total Credit Limit?
04) Do you have any proof for the system error?

rijayasooriya · 5 Re: Expert Advice Needed Fri Feb 17, 2012 9:29 am

rijayasooriya

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I faced some what simillar situation when capital trust changed their online trading system to Directfn.Fortunately I did not utilise all the buying power and next day my so called investment advicer told me the problem....But in ur case they had not informed u about this error.I think first u have to complain about this situation to head of ur broker firm in written.Then if they do not arrange a fair decision for u u can complain SEC.

Read following thread also it might help u.

http://forum.srilankaequity.com/t9215-be-careful-with-acuity-stockbrokers?highlight=be+careful+with+asia

Chinwi · 6 Re: Expert Advice Needed Fri Feb 17, 2012 12:26 pm

Chinwi

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This is the ugly devil of margin trading in down markets.

I cannot believe how you purchased such big amounts to make you in debt like this. I always maintain below 23 % gearing in everything.

I am very sorry I cannot see how you can escape using this System Error , even if you prove it was there. Because the error just increased your allowed limit for buying.

Ultimately the buyer should pay.

Somehow ,
can you re-calculate your business ?
I think you are talking about recent activity, max within last year.
I just tried this way:
Invested 300,000.00 margin allowed 150,000.00.
Bought 100% New portfolio 450,000.00
If share values rose by 20 % to 540,000 ( ?? last year ?? ) you can have 270,000 margin. ( 270,000 - 150,000 = 120,000 available )
Due to system error, say, they allowed 240,000.00 instead of 120,000.
then you buy 100% and portfolio is 540,000 + 240,000 = 780,000.00

Now portfolio is 780,000.00 ( your part =300,000 debt to them= 480,000)

As a human being you should know you cannot go beyond that even the system allowed you. For last 6 months I don't think the share values rose that much to make you vulnerable.

Now if the share prices fell by 40 % .
Above portfolio is now 468,000.00
If they sell the entire lot , they get 460,000.00. You get nothing. As your debt is 480,000.00 you have to find the difference 20,000.00

If you are doing this from early 2010 then disregard my calculations.

rijayasooriya · 7 Re: Expert Advice Needed Fri Feb 17, 2012 1:15 pm

rijayasooriya

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yasser wrote:I invested 300,000 and traded on margin as well, but my buying power kept increasing and I kept buying not knowing exactly what it was. One day the broker called me and said I have bought in excess, and my power was shown due to system error and need to sell. The broking firm kept quiet until the maket dropped down and sold my entire portfolio.
Now I have to pay the broking firm more than 300,000 its almost 500,000 and with no shares in the portfolio.
1. Whom can I report this to? - I dont have money to pay this amount
2. Can they take legal action - it was their system problem.

This could happen to new comers who would use margin trading.

NEED EXPERT ADVICE.

I checked ur previous posts.U seems to be faced same situation several times.Why arn't u more careful Or is this ur previous experience ? Surprised

http://forum.srilankaequity.com/t4296-capital-trust

ruc · 8 Re: Expert Advice Needed Fri Feb 17, 2012 5:52 pm

ruc

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I also had similar incident yesterday.I wanted to sell some shares @ 48.00 for 5 days.after one day i wanted to amend it to 49.00 & I did it.I got the confirmation too.but next day I found that it has sold @ 48.I can't imagine what was happened.
If anyone knows pls tel me.I'm new to the field.