Good to hear the other side of the story. Thanks.
Too bad for the lawyers...
Too bad for the lawyers...
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$52k gone from my IB account. What next, sue IB?
- Thread starter zzzap
- Start date
Quote from ssblack:
If you fully reimbursed him for the loss, my absolute f#$&ing hats off to you. You did the right thing.
"IB will indeed compensate the client for loss. We will need to decide how to interpret the activity from 19:55 onwards to determine the amount. It is a problem that the risk was not covered when first recognized. IB's standard position in all trading issues is "manage your risk" because the market will not sit around waiting while we research a problem."
It would be very impressive to see the client get fully reimbursed.
AZD
For myself I am pleased that should an issue of this nature create an unforeseeable disaster for me I will probably NOT be left out in the cold by IB. At least not after some debate at ET.
If you read the statements carefully you will come to the conclusion that zzzap won't get fully reimbursed.
At a certain point he was back on TWS and at some stage in there he should probably have noticed the problem ... but maybe not ... and I think that the discussion on that area will determine what percentage of full it is.
But, despite that, if I was zzzap, I would be pleased to be approaching this solution. My best wishes to all concerned.
If you read the statements carefully you will come to the conclusion that zzzap won't get fully reimbursed.
At a certain point he was back on TWS and at some stage in there he should probably have noticed the problem ... but maybe not ... and I think that the discussion on that area will determine what percentage of full it is.
But, despite that, if I was zzzap, I would be pleased to be approaching this solution. My best wishes to all concerned.
IBj, Kudos to IB if it reimburses the whole $52k +inactivity fee for the last month to the account holder promptly. Better late than never. I just wished it had not taken 6 weeks and it did not need so much interests of ET. IB needs to work on the promptness so that it does not keep the customer in black hole. Often, justice delayed is justice denied.
SteveIB/IBj, Some of your telephone CSRs does not provide any kind of name or reference at all. A few particular ones are very notorious about it. Apparently they seem to think there would not be any responsibility if they can get away without giving such information to the customer ene though the calls are supposed to be recorded. One of them recently put the caller on hold multiple times; then thought for a while whether he should give a name and wasted everybody's time, then put the caller on hold with music--apparently hoping the caller would eventually hang up.
SteveIB/IBj, Some of your telephone CSRs does not provide any kind of name or reference at all. A few particular ones are very notorious about it. Apparently they seem to think there would not be any responsibility if they can get away without giving such information to the customer ene though the calls are supposed to be recorded. One of them recently put the caller on hold multiple times; then thought for a while whether he should give a name and wasted everybody's time, then put the caller on hold with music--apparently hoping the caller would eventually hang up.
It looks like IB will compensate up to $12,000 because the rest of the loss happened after 19:55 when the trader was in control. That's how I read it anyways.
Thanks to IBJ for describing their analysis in detail and to the OP for allowing IB to post the results here. Two quick questions:
1. at what point on the time line did the OP contact IB?
2. in my experience, compensation for out trades is based on liquidating the position (at a profit or a loss) immediately because brokers are not in the business of writing free options on their mistakes (I don't know when that point is in this case). My question to IB is: what procedure would you advise clients to use in this or similar cases, e.g.:
- liquidate immediately (given market liquidity),
- call IB to confirm that the trade was not miscoded to our account (for example when it is another client's good trade...strange but it happens) and then liquidate if appropriate
- other
In any case it is reassuring to see that IB is handling this responsibly and best of luck to the OP in settling this satisfactorily and getting on with profitable trading.
1. at what point on the time line did the OP contact IB?
2. in my experience, compensation for out trades is based on liquidating the position (at a profit or a loss) immediately because brokers are not in the business of writing free options on their mistakes (I don't know when that point is in this case). My question to IB is: what procedure would you advise clients to use in this or similar cases, e.g.:
- liquidate immediately (given market liquidity),
- call IB to confirm that the trade was not miscoded to our account (for example when it is another client's good trade...strange but it happens) and then liquidate if appropriate
- other
In any case it is reassuring to see that IB is handling this responsibly and best of luck to the OP in settling this satisfactorily and getting on with profitable trading.
I use multiple pages on my TWS, a phantom order could be executed and I wouldn't know until I checked all open positions and all open/executed orders.
Just because ZZAP was at his terminal does not mean he was in "control" of the erroneous order.
So far so good on IB's part in dealing with this; all they have to do is put this to bed.
Just because ZZAP was at his terminal does not mean he was in "control" of the erroneous order.
So far so good on IB's part in dealing with this; all they have to do is put this to bed.
Quote from IBj:
19:55:57 Client submits multiple orders in various currencies. This is the first time we can know with certainty that the client is using and attending the TWS. Had he covered the GBP position at this time, the loss would have been roughly 12000 USD.
It will be very very interesting to see what the actual outcome is.
It's a little hard to give IB unreserved kudos here, since they had told this customer that a decision had been made and that his loss was his own.
The quote above looks a bit like the thin end of the wedge to me, but once again, let's see what develops. It will be a huge confidence booster if it turns out that IB makes this customer whole.
Is it their responsibility to make this customer whole? I'd like to see some debate on that topic, since IB's contention is that they can pinpoint where in time the customer became aware of the situation. If a customer suddenly sees a huge losing position in TWS, one about which they have no idea whether it is an actual position or how it came to be, is the customer supposed to get flat? What happens if it's a TWS glitch and the position doesn't actually exist? What happens if the position is real but is itself the result of a TWS glitch, and in between the log-in and the order to get flat, the position becomes a losing one? In this case, does IB say 'At such and such a time the position was in the money'?
I have to believe that if a trader knows he's in a mistaken position, it's his responsibility to get out now and ask questions later. If it turns out that the OP could have gotten out completely and decided to try to get cute with the position, he is going to be out of luck with IB. However, as RAY points out, how does IB prove that the trader was aware of the position just because he is logged in. Does TWS auto-log screen toggling? No way...
It will also be very interesting to see what the OP says about the idea that the whole problem was caused by a double click on order entry. Expensive fat fingers. There's gotta be a mouse setting that mitigates the risk of that kind of thing. Link to trading-optimized mice, anyone?
Quote from IBj:
SUMMARY / ANALYSIS
- IB's client agreement says that the client is responsible for any order he/she submits and, strictly speaking, the client did submit these orders. But sorry to disappoint all the people with their hands on the speed dial to their attorneys, IB really tries to run its business based on business principles, not legal nuances. We live in a litigious world, so protective agreements are the universal way to define exposure limits around which we are always free to improve.
- The double click of the client was an error but so what. It is not reasonable to expect someone to recognize this extraordinarily arcane situation. The TWS was patched to prevent this about a week after the problem was reported to the developers.
- IB will indeed compensate the client for loss. We will need to decide how to interpret the activity from 19:55 onwards to determine the amount. It is a problem that the risk was not covered when first recognized. IB's standard position in all trading issues is "manage your risk" because the market will not sit around waiting while we research a problem.
- We absolutely dropped the ball in responding to the client. The problem occurred on 9/18. He contacted us a few hours later and then contacted one of our developers with whom he has previously communicated on October 5. It was escalated and it actually even got to me (as I just am discovering going through the contact history now) but I seem to have misunderstood the problem and passed it to the wrong person. It simply got buried as new issues piled in behind. Not good. I apologize to Zzzap that we did not resolve this more promptly.
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First, thanks for the detailed explanation of this situation. It's quite helpful to know in detail what took place.
It appears that despite all the whining and gnashing of teeth, Zzzap did in fact double click, which then set off a chain of events leading to the loss he was whining about. I think it's important to acknowledge this fact. Operator error so to speak. Now, you seem to be willing to look past this, and therefore there is no reason I shouldn't too.
Next, when Zzzzap finally discovers the error (or at least should have discoverred it unless he had his eyes closed when he signed on) he makes a decision to play the market with the position, thus violating a time honored tradition of when an error is made, you get the hell out. Period.
However, I'm glad IB will be making some corrections to the software based on all of this.
I can't see how Zzzap deserves a full reimbursement of his losses. To me it looks like he played the market, he takes the market related loss. The loss steming from his original double click, to his recognition of the position would seem to be a much more logical reimbursement.
OldTrader