debt with broker!

R

rimbower

hi and sorry for my english,

I am living in Spain. I had an incident with the broker GLOBAL FUTURES Enchange&trading Co. about two years ago. I describe it below:

I had an account of 3000 usd and my positions began to get negative results and I decide close all negative positions but the trading platform blocked and I can´t close the positions, then I close the trading platform and re-opened it but it does not work. Finally after 2-3 hours a global futures agent phone me and say me that they closed my positions and that the resulting balance of my account is -2000usd (deficit). I answered that I accept the total loss the inicial deposit (3000 usd) but I don´t accept a debt that I haven´t got caused or requested. ¡They must execute the margin call !. they must close when the balance is below of maintenance margin.

This week I received a call from a law firm representing GLOBALFUTURES and they said me that if I don´t accept the debt they will report me in my country. They said me that if I avoid litigation they lowering the debt 1500 usd.

Please appreciate your advice, because I am a little confused because I do not want legal problems with anyone. I believe I am responsible for the loss of money but I do not have to deal with a debt that I have not led since I could not close the transactions by a failure in the trading platform of Global Futures. The broker should have closed the losing positions when the bill came into margin call.



Sincerely,
rimbower



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I don't know how you'd prove it was an error with their software and not an a problem with your computer. And it sounds like you got burned by leverage.
 
A couple of comments.

1) Poor practice on the part of Global Futures to not liquidate your account until you already had negative equity. It should have been done after you were below the minimum margin requirement but before there was nothing left in the account.

2) When the trade plateform didn't work, why didn't you call and ask them to execute the trades on your behalf? There's always going to be cases of system problems and the brokers aren't liable for this (even if it's their fault!).

3) Report you to your country. What a joke. If they haven't gone through the full legal process and received a judgement against you, it's your word against their's.

4) You're not talking much money and it's been a long time. I would just respond that "upon review of the matter, you have concluded that no remittance is due Global Futures". Chances are they are just finally getting around to sending out notices like this to hundreds of accounts and expect to get some positive response from a small number of them. It's too small for them to agressively pursue, especially when you're not a resident.

Note: I'm not an attorney. This is just my reaction.
 
I'm not an attorney but here is my take.

When you signed the contract to open the account - the one that was as thick as the bible - you absolved them of any responsibility, even from technical problems that could occur on their end so the $2,000 deficit is your responsibility. This is one of the risks you take for trading futures.

That being said, you live in a foreign country so they will have a difficult time collecting from you even if they get a judgment against you. The amount of money you owe them is a relatively small amount so it's probably not likely they will pursue a judgment and execution of that judgment because the cost of doing so will probably exceed the recoverable amount.

When they say they are going to report you in your country what they probably mean is they will black list you on your country's exchanges so you won't be able to open any brokerage account in your country or if you have a brokerage account open already you will probably be prevented from placing any trades.

So is it worth more to you to pay the $2,000 or not? Only you can decide.
 
just my opinion, not legal advice. :)

i say forget this firm. But, before you do, check time and sales to make sure they could have reasonably gotten you out before the execution that cost you more money.

If they had reasonable time and ability to get you out before, i wouldn't send them a dime. however, if it was super illiquid or the only trades that went off were really yours, then you are stuck.

did they report you to a collection agency?
is this on your credit report?
can you open up another account with another firm?

all comes down to reasonable expection by a prudent man. If my broker should sell at 1108 due to margin call, a billion contracts go off from 1108 to 1100 and they sell me out at 1099 and say it's my fault...i don't think so.

use common sense

good luck
 
A broker is not required to manage a trader's risk, just their own. So when you suggest the OP looks to see if GF could have gotten him out at a better price you are presenting an irrelavant argument. They are not required to fight for a better fill whether it's a liquid market or not. The broker has the OP over a barrell. It's just a question of whether the OP wants to fork over the $'s or not.

Shame on GF for not managing <b>their</b> risk better! IB never would have let the deficit get to this point.

Quote from PPT:

just my opinion, not legal advice. :)

i say forget this firm. But, before you do, check time and sales to make sure they could have reasonably gotten you out before the execution that cost you more money.

If they had reasonable time and ability to get you out before, i wouldn't send them a dime. however, if it was super illiquid or the only trades that went off were really yours, then you are stuck.

did they report you to a collection agency?
is this on your credit report?
can you open up another account with another firm?

all comes down to reasonable expection by a prudent man. If my broker should sell at 1108 due to margin call, a billion contracts go off from 1108 to 1100 and they sell me out at 1099 and say it's my fault...i don't think so.

use common sense

good luck
More...
 
If you have an account at a specialized futures firm, you should always expect that they don't close your margin-calls. That's why you always need to have a phone number ready. Sounds like you didn't prepare the business side related to trading, and just focused on the trading side.

If I were you I would try to find a middle ground. Blacklisting sounds serious enough. If the debt is $2000, try calling them and say you can't afford more than $1000 or something like that. $1000 sounds fair as they will lose a bit and you will lose a bit too. negotiating small debts like these is usually the easiest way, for both parties.
 
OK. i wonder about the scenario when you hold a position overnight that is actually too much for your account. Initial margin greater than available equity. maybe that is a different story. I doubt the OP held overnight, but you never know.

i need more facts from the OP. :)
 
Quote from PPT:

OK. i wonder about the scenario when you hold a position overnight that is actually too much for your account. Initial margin greater than available equity. maybe that is a different story. I doubt the OP held overnight, but you never know.

i need more facts from the OP. :)
More...

margin call an overnight position is more unlikely than one intraday. overnight margin is $6000 and circuit down is 120 points. So I doubt he was trading overnight. It's a different matter when the futures firm behaves irresponsibly and gives you $2000 margin overnight or that like.
 
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