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April Fools Sees Fake Extra Millions For Users of Brokerage Site 280

Posted by ScuttleMonkey
from the where-not-to-do-business dept.
Upstart online brokerage site Zecco had an unfortunate April Fool's day snafu that they are claiming was an honest mistake. Users logged on to find larger balances than they should have, sometimes millions of dollars extra, and many of those users started trading with the nonexistent money. Happy April Fool's Day. "... when Zecco realized it, the company apparently started to force sell, even at a loss, charging the losses to the customers along with a '$19.99 broker-assisted trading fee.' Oops."
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April Fools Sees Fake Extra Millions For Users of Brokerage Site

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  • by actionbastard (1206160) on Monday April 06, 2009 @01:45PM (#27479351)
    the conservative, sandwich-heavy portfolio pays off for the hungry investor. - Dr. Zoidberg
  • Wow! (Score:5, Funny)

    by fuzzyfuzzyfungus (1223518) on Monday April 06, 2009 @01:46PM (#27479367) Journal
    It's like a performance art piece about our worm-riddled crony capitalist mess!

    Quit making excuses guys, and head on down to the gallery...
  • Conficker? Or just some programmers/administrator's Easter Egg?

    • Poorly done April Fools joke. They weren't smart enough to think it through to the logical conclusion. They give people huge fake balances. People have no obvious way of knowing they're fake. People do what people do - use the money.
      • by Anonymous Coward on Monday April 06, 2009 @02:05PM (#27479649)

        ...people aren't that stupid.

        More likely many of them realized "Hey, this could be an aprils fool or then not. I don't know. I could check it and get confirmation oooor.... I could act as if it wasn't and sue the hell out of them if this is!"

        While nobody should be stupid enough to fall into that joke for too long, no organization should be stupid enough to make jokes with large sums of money.

        • Re: (Score:3, Insightful)

          by JWSmythe (446288) *

              I'd prefer to think Option C.

              If a person had $10k in the account, and it's suddenly $1m, spend it. Even if they have to resell tomorrow, maybe (just maybe) they'll turn a quick profit. so, you only get 1$ on that $1m, now you've just doubled your real starting capital.

              The big boys play this game all the time. They play with imaginary money, to make real money. It just burns them sometimes too.

          • by lazy_playboy (236084) on Monday April 06, 2009 @04:04PM (#27481181)

            And what happens when you're forced to resell at a loss?

            Just because my credit card company keeps increasing my limit doesn't mean I go and throw it all on the markets straight away. Note, this glitch was only on the available balance, not on the account assets. All this was was an error on the amount allowed to be borrowed... if there's anything the recent recession has taught us, it's that just because someone wants to loan us the money doesn't mean we should take it.

            Or am I missing something?

          • by bitrex (859228) on Monday April 06, 2009 @10:56PM (#27484827)

            The big boys play this game all the time. They play with imaginary money, to make real money. It just burns them sometimes too.

            In the case of the "big boys", they were able to privatize the profits and socialize the costs to their hearts content after they had the Glass-Stiegel act pulled. They profited enormously off of trading imaginary money for tangible wealth, and burned us.

      • by Anonymous Coward on Monday April 06, 2009 @02:40PM (#27480129)

        Poorly done April Fools joke.

        Come on. Anyone with half a brain could figure out that no financial company would do something like that just for a "joke". Their liability for lawsuits and shit would be so obvious that they wouldn't even dream of doing that.

        However, it would be more likely that it could have been an April Fools' joke of some idiot employee thinking it was funny to do such a thing without company approval. And according to their press release, likely was thrown out the door.

        From their press release...

        On April 1, 2009, one of our vendors provided Zecco Trading with an incorrect data feed which caused some customers to see erroneously high buying power.

        [...]

        Additionally, we want to make it clear that contrary to some reports, this was not in any way intentional and was not an April Fool's joke.

      • by GooberToo (74388) on Monday April 06, 2009 @03:20PM (#27480579)

        People have no obvious way of knowing they're fake. People do what people do - use the money.

        And people who have done the same type thing with ATMs find they are fully responsible for their spending habits. If today you have $1,000 in the bank and tomorrow you find $1,000,000 in your account, it is rather obvious you didn't just make $999,000 dollars over night. If you spend it, you just spend dollars out of your original $1,000 and not out of your desired $999,000. If you go in the negative, you're still responsible for the negative balance. At least that's how the courts have treated these cases in regards to ATMs. And guess what, they even had to pay their applicable ATM fees.

  • by neo (4625) on Monday April 06, 2009 @01:47PM (#27479379)

    Seriously. I thought all financial institutions had given up on using Perl for their back-end systems. One misplaced _$ and suddenly everyone is swimming in money.

    Next time use a strict typing language like Haskell.

    • Re: (Score:3, Informative)

      by Dan667 (564390)
      use strict;
    • by idontgno (624372) on Monday April 06, 2009 @01:59PM (#27479567) Journal

      I appreciate a good Perl joke as well as the next Perl hacker, but if you wedge a "_$" into your code you'll just get syntax errors. Did you mean "$_"? That error (misplaced default parameter) I've seen quite often, mostly among Perl nubs.

      I can't comment on the frequency or trend of Perl back-end systems. Most back-end systems I've worked with are J2EE.

      Next time use a strict typing language like Haskell.

      Your ideas on type-safety are intriguing to me and I wish to subscribe to your newsletter.

      • by neo (4625)

        It was indeed a Perl joke and it's been too long since I've programmed in it to remember that $_ was the correct sintax. I mean syntax. I guess I'm still in the category of "Perl nubs".

      • Re: (Score:3, Insightful)

        by ukyoCE (106879)

        A friend just found a bug in his (production) Java code, despite strict typing:

        if(condition);
        { //Code that always happens due to bug
        }

        Strict vs. loose typing has little effect on code quality. Testing+QA is how you avoid mistakes, not strict typing.

        Strict typing only removes a small class of runtime errors. Which are then reintroduced due to strict typing (and compilation) being such a pain that most projects use loosely typed XML config files for an awful lot of "programming". Doh.

    • Seriously. I thought all financial institutions had given up on using Perl for their back-end systems. One misplaced _$ and suddenly everyone is swimming in money.

      Hahaha, surely, thou art on the highway to Hell.

      Ducketh thou, the swine that thou hast cast your perl before will rise up and smiteth thee.

      • by Plutonite (999141)

        Nay, but duckest thou, the swine before which thy olde joke was cast has freakin' Haskell.

  • marketing (Score:2, Redundant)

    by Lord Ender (156273)

    I'm guessing some coke-head in marketing/sales dreamed this one up to get free press about the site. Nobody in IT or Finance would conceive of a "joke" so stupid.

  • The mountain is high, the valley is low
    And you're confused 'bout which way to go
    So I flew here to give you a hand
    And lead you into the promised land

    So, come on and take a free ride (free ride)
    Come on and take it by my side
    Come on and take a free ride
  • by Red Flayer (890720) on Monday April 06, 2009 @01:53PM (#27479499) Journal
    I logged in to Zecco 4/1 at around 9:30 AM... my cash-on-hand was off by about $1.6 MM (balance was 1.8 MM instead of 0.2 MM). I immediately instructed Zecco to wire me the excess funds... and the funds hit my bank account at 12:02 PM!

    As of today, the money is still in my account, but there is a hold on it. Apparently, the funds transfer was initiated properly, fully authorized... so my bank is holding the funds while I accrue interest on it until they determine final disposition.

    Oh hell, who am I kidding... I don't have 0.2 MM in an online investment account. Hell, I don't think I have 0.2 MM is assets, unless you include my wife & daughter, who I could probably sell for that much if I found a good buyer or if there was a bidding war.

    Oops... was that my out-loud voice?
    • by Anonymous Coward on Monday April 06, 2009 @01:56PM (#27479537)

      Hell, I don't think I have 0.2 MM is assets, unless you include my wife & daughter, who I could probably sell for that much if I found a good buyer or if there was a bidding war.

      Pics?

    • by Anonymous Coward on Monday April 06, 2009 @02:05PM (#27479659)

      Did the dollar got so low that now we are valuing things in m&ms?

    • Re: (Score:2, Funny)

      by VojakSvejk (315965)

      Well, I do have that much in a brokerage account, and like you, I transferred the unexpected bonus to my checking. There is a hold on the account, but if you can give me your account number, I think I can transfer the money to you, and I will be glad to let you keep half of it....

  • by Leafheart (1120885) on Monday April 06, 2009 @01:54PM (#27479505)

    Let me see if I get this straight (understanding that the summary has a typo and should read they shouldn't have on the second statement. Or, and this is the link to the consumerist story. [consumerist.com]

    You log in your account and find a huge sum of money in their. Or, I hit the jackpot you think. Now you go and start using it for trade. TFA is a bit lightly on the details, but looks like this trades were go, meaning basically, market fraud. Not, to add some salt on all this, they go out to reverse the money, sell the stocks people bought at a loss, charge than the loss and ask for a commission??? I see lawsuits coming from so many points it gets ridicule.

    From the consumerist post: "west: ummmm, this is ridiculous. so i thought it was an april fools joke, put in an order for SKF, and it went through then Zecco just sold it â"-- more than likely making me take the loss please let me know if any of you experienced this! lol....and they charged me $19.99 for commission". So basically they did an April's fool joke, it went wrong, and they are trying to make people pay for their mistake.

    Impressive. They do get credits because you need a lot of balls to joke with the market after all it went through recently. And no, I don't buy the "honest mistake" line.

    • Re: (Score:3, Interesting)

      by EvanED (569694)

      So basically they did an April's fool joke, it went wrong, and they are trying to make people pay for their mistake.

      They've retracted the charges & losses (at least according to them); I'm just going to guess that they were still present for a while while they were sorting out WTF happened.

      And no, I don't buy the "honest mistake" line.

      I'm not sure I do either... I'm going to guess "rogue employee playing April 1st joke". The company would have to be pretty damn retarded to actually go through the normal

      • Re: (Score:3, Interesting)

        by Leafheart (1120885)

        I'm not sure I do either... I'm going to guess "rogue employee playing April 1st joke". The company would have to be pretty damn retarded to actually go through the normal decision channels and approve this.

        I'm going with the "April's Fool" not followed to the end. Someone at IT screwed it up and forgot to route the transactions with that money to an "Ah-ha page". Someone at finance forgot to put safe places to flag really strange movements. And someone at marketing screwed it up thinking about this.

    • Re: (Score:3, Insightful)

      by ieatcookies (1490517)
      I dunno. My problem here is that I highly doubt anyone cared to double check their investment first. This is the classic "oh shit, the bank machine says I have 100k instead of 10, quick, withdraw". In no way am I suggesting this isn't a mistake on Zecco's part. But people have a responsibility with their monies, and if you log into your online investment management system and see a number that clearly isn't right, you have a responsibility to take appropriate action. That action is not: WOO HOO LETS TR
    • Bloody hell, I need to get my proof-reading skills in better shape, so many spelling mistakes again.
    • You log in your account and find a huge sum of money in their. Or, I hit the jackpot you think. Now you go and start using it for trade. TFA is a bit lightly on the details, but looks like this trades were go, meaning basically, market fraud.

      I think filing a lawsuit would be overwhelmingly stupid, because anyone who opens their account and sees the balance off by a million dollars should reasonably know that there's been a mistake. If a jury agrees, then you've got a case of fraud. File the lawsuit and the SEC will come down on you hard for 10b violations.

  • First of all... (Score:5, Informative)

    by Ecuador (740021) on Monday April 06, 2009 @01:56PM (#27479539) Homepage

    First of all, it obviously WAS an honest mistake. Even if they millions showing up as "buying power" were intended as a joke, the fact that the system allowed them to be used for actual purchases, most certainly was a mistake.
    Now, when you have a brokerage account and are trading stocks, you should know what you are doing and be responsible for your actions. So, when you see several million in you account, you should know as much to not start investing them. If it is not your money, at best it will be considered a margin trade which has to abide to SEC mandated rules. IIRC on a margin trade you have to have equity worth 25% (or whatever the figure is) of the security that you acquired on margin. Otherwise the broker has to automatically sell to cover. If you don't know things like that, you should not be trading at the stock market.

    • Re:First of all... (Score:5, Insightful)

      by Leafheart (1120885) on Monday April 06, 2009 @02:00PM (#27479573)

      Now, when you have a brokerage account and are trading stocks, you should know what you are doing and be responsible for your actions. So, when you see several million in you account, you should know as much to not start investing them.

      Unless of course you see the date, think that it is a joke and start bidding with it to go along with the prank. If you go with the company "it was a mistake, sorry.", you can't blame the costumers for going along and pretend they had that money.

      • Re: (Score:3, Interesting)

        by EvanED (569694)

        Exactly. Bidding because you think you'll actually use the money is stupid; bidding because you think it's a prank is at least somewhat reasonable. From the comments in the linked article, sounds like there were several at least who did this, and were quite surprised when they actually went through. Zecco is going to have a "fun" time sorting this stuff out.

        • Re: (Score:2, Interesting)

          by Anonymous Coward

          Exactly. Bidding because you think you'll actually use the money is stupid; bidding because you think it's a prank is at least somewhat reasonable.

          If you're some young guy living in your parents' basement who was playing around with an online brokerage account that only had a couple hundred dollars in it, then yeah, the whole April fools thing might seem funny.

          On the other hand, if you're nearing retirement and you've got enough in your brokerage account to live for 20 years at $50K per year - and if you've seen enough of life to know that really bad things do sometimes happen - then this wouldn't seem funny at all. You would recognize that the minute

    • by Reason58 (775044)

      Now, when you have a brokerage account and are trading stocks, you should know what you are doing and be responsible for your actions.

      I think you would have a much stronger point if the root of this entire problem was caused by the customers and not the company.

      • by Ecuador (740021)

        Nope it is not only about the company. If a bank accidentally puts $1 million in your account and you go to Vegas, you WILL go to jail. It was not your money and you knew it.
        If a brokerage puts $1 million in your account by accident and you gamble it away (What do you think the stock market is?), you are also liable.
        Now the $19.99 fee is pretty bad tactic on their part (although possibly technically correct) and I suspect they might at least remove that to alleviate some of the bad publicity. But they quite

  • by creimer (824291) on Monday April 06, 2009 @02:00PM (#27479583) Homepage
    Screw ups like this is why I insist that all financial institutions that I have business with send me paper statements.
    • by Anonymous Coward on Monday April 06, 2009 @02:19PM (#27479829)

      And how exactly does that help if there's a computer error? In the process of "generate document, print it, mail it to you", replacing the last two steps with "email it to you" has no effect on that crucial step one.

      • Re: (Score:3, Insightful)

        by Jah-Wren Ryel (80510)

        No financial institution that I am aware of actually emails you the paperless document. They email you a link or notification to log in and view it online with the option to download a copy. It is difficult to automate the log in and download process based on receipt of an email, probably beyond the ability of 99.999% of their customers. That means that there is plenty of opportunity for manipulation of the "paperless document" on their servers at least until the user actually saves a copy and I'll bet y

        • It is difficult to automate the log in and download process based on receipt of an email
          Not to mention risky and probablly against the terms and conditions of your agreement with the bank since the autologin would have to have your login details.

    • by eln (21727) on Monday April 06, 2009 @02:40PM (#27480121) Homepage

      Screw ups like this are why I never, ever spend money someone else (the bank, the brokerage, etc) tell me I have unless I can verify through my own records that I actually have that money.

      Despite what Monopoly may have taught you, there is NEVER a bank error in your favor. If a financial institution screws up in a way that benefits you, you can GUARANTEE they will eventually find it and fix it, and if you've tried to take advantage of the situation in the meantime you're going to get hosed.

      • by bar-agent (698856)

        Despite what Monopoly may have taught you, there is NEVER a bank error in your favor.

        Not true. Back when I routinely checked all my bank statements, I found more than one missing withdrawal (meaning I withdrew or spent money and they didn't debit the account). I even called them up about it once. They said "we don't have a record of it, and thanks anyway, but it's not worth correcting." Usually, the error was less than $40, but I think I remember one that was one-hundred-something.

    • by tmosley (996283) on Monday April 06, 2009 @03:08PM (#27480407)
      Screw ups like this are why I hate April Fools with a passion. Anyone that works under me knows that if they participate in an April Fools joke at work that I will be very angry at them. Things that start as an April Fools joke can easily end in injury or lawsuits. Either the day ought to be a national holiday or it should be abolished. Some jokes are very funny, but too many end in disaster. One year I had someone give two weeks notice because they thought they had won the lottery, later the same day she came in and sheepishly retracted her notice. Imagine if she had quit on the spot, and said a few choice words to the folks in the office. I might not have been able to keep her on had her reaction gone just that much further...
  • by Grashnak (1003791) on Monday April 06, 2009 @02:05PM (#27479651)
    ... if a ridiculously large amount of money shows up unexpectedly in your bank account, rushing out to spend it wildly before the mistake can be caught is not actually the smartest of the available options. The authorities look disapprovingly on such activities.
    • by Culture20 (968837)

      ... if a ridiculously large amount of money shows up unexpectedly in your bank account, rushing out to spend it wildly before the mistake can be caught is not actually the smartest of the available options. The authorities look disapprovingly on such activities.

      Forget the authorities; the Russian mobsters who put it temporarily in your bank account look disapprovingly on such activities.

    • by Selfbain (624722) on Monday April 06, 2009 @02:22PM (#27479877)
      The real solution is to move it to a Cayman Island's bank account, skip the country and then rush out to spend it wildly.
    • by TheKidWho (705796) on Monday April 06, 2009 @02:23PM (#27479895)

      Unless you thought that ridiculously large amount of money was a prank and you didn't think you could actually spend it.

    • by bitt3n (941736)

      ... if a ridiculously large amount of money shows up unexpectedly in your bank account, rushing out to spend it wildly before the mistake can be caught is not actually the smartest of the available options. The authorities look disapprovingly on such activities.

      unless of course your are the bank, in which case that is exactly what the authorities are praying you'll do.

      • At which point the authorities will "bail you out" with taxpayer money you get to KEEP!

        Or you are a mortgage holder who fell for $300K for $500/month, and now the authorities force the bank to eat their losses and give you a mortgage you can actually afford, rather than the one you'd should've known you couldn't.

        More taxpayer money!

    • ... if a ridiculously large amount of money shows up unexpectedly in your bank account, rushing out to spend it wildly before the mistake can be caught is not actually the smartest of the available options

      The smartest thing to do is take it all out as cash, convert it into gold bars, then disappear.

       

    • ... if a ridiculously large amount of money shows up unexpectedly in your bank account, rushing out to spend it wildly before the mistake can be caught is not actually the smartest of the available options.

      Smart, no, but fun, yes. Although, I would get my hairy ass out of the country before I started spending.

      The authorities look disapprovingly on such activities.

      Yeah, well I look disapprovingly on the god-damned authorities that instrumented this financial meltdown that we are festering in.

      And empirical evidence suggests that "the authorities" favor folks who spend money that they don't have: "The bigger the loss your company makes, the bigger the bonus you get."

    • These are not FDIC insured bank accounts, where you expect returns of ~1-5 percent per year.

      If I suddenly saw 1000x the expected amount in my stock portfolio, my first thought was that something I own is worth a hell of a lot more than I paid for it. Maybe there were rumors that a penny stock was suddenly in a bidding war between mitrosoft and IBM. Whatever. It doesn't matter.

      My first reaction would be to sell everything I had and invest the cash in something else (or cash out completely).

  • by Bearhouse (1034238) on Monday April 06, 2009 @02:10PM (#27479717)

    It's true, we're doomed, I tell you!!!
    *reaches for tinfoil hat*

    More seriously, original post is here. They're claiming it was a mistake in a feed...

    http://preview.tinyurl.com/ca37sl [tinyurl.com]

    An abstract...

    "The surge in "Buying Power" was an accidental extension of credit to the customers' accounts. Actual funds were not deposited therein. After the error was discovered, the mistaken credit was withdrawn. However, not before some executed trades on the lines of credit, including including one guy who bought over $1 million in shares. The company then acted to reverse the errors, saying on their blog, "Except in a very small number of egregious and fraudulent cases, customers will not be responsible for losses (or gains) incurred for trades in excess of their buying power."

    Wonder how they define "egregious and fraudulent"?
    *removes tinfoil hat, reaches for lawyer*

    • ""Except in a very small number of egregious and fraudulent cases, customers will not be responsible for losses (or gains) incurred for trades in excess of their buying power.""

      -No fraud was perpetrated. The customer had no influence on what funds were available and how much they got.

  • by sirwired (27582) on Monday April 06, 2009 @02:20PM (#27479845)

    If a large amount of money shows up in your bank account, and you have no idea how it got there, spending it WILL land you in jail if you withdraw the money and hide it or blow it.

    This is the case even if you ask the teller if the money is yours and he/she says yes. Once they figure out the truth, they WILL hold you responsible for the cash.

    I see no difference between that and this case. These folks knew they did not actually have an account worth millions, yet they bought stock based on money they did not have. Gee, what did they think was going to happen; of COURSE the broker is going to get their cash back ASAP.

    If I was the broker, I would waive the trading fees for selling your shares, but would hold the account holder responsible for any losses. Maybe, in a goodwill gesture, sign over the gains (if any) also, but that would be the limit of my generosity.

    SirWired

  • I see the problem (Score:5, Informative)

    by Un pobre guey (593801) on Monday April 06, 2009 @02:20PM (#27479847) Homepage
    • You are a Zecco customer with $20,000 in your account
    • One day you log in and see that you now have $1,020,000 in your account
    • Your heart is filled with bliss
    • You start making trades with your new-found fortune
    • Zecco discovers the error and reverts the trades at your expense
    • You are angry and feel cheated
    • You are a complete and utter dipshit
    • by Anonymous Coward on Monday April 06, 2009 @03:23PM (#27480617)

      Try this:

              * You are a Zecco customer with $20,000 in your account
              * On APRIL FOOLS day you log in and see that you now have $1,020,000 in your account
              * Your heart is filled with humor. "I get the joke!" you say.
              * You start making joke trades with your joke fortune
              * Zecco executes the trades, then reverts the trades at your expense
              * You are angry and feel cheated

    • Re:I see the problem (Score:5, Interesting)

      by JustinOpinion (1246824) on Monday April 06, 2009 @03:44PM (#27480905)

      Indeed. But there are some fringe cases that I'm sure will cause headaches. Like:
      -Zecco customer with $20,000 in their account.
      -One day they log in and see that they now have $1,020,000 in their account.
      -They make an investment for, let's say, $15,000.

      Does Zecco cancel the investment, or honor it, or what? Consider:

      A. If the investment went up, the customer can claim that they were trying to invest $15k of their $20k, that it was a legitimate transaction, and that they should be allowed to keep the gain.

      B. If the investment went down, the customer can claim that their investment strategies were unduly influenced by their seemingly-increased buying power. They claim Zecco's mistake is responsible for their overly-risky investment, and that Zecco needs to cancel the trade, and restore their account to the way it would have been if the trade had never happened. They can say "You canceled the investments of all those other customers! Why not mine?"

      If Zecco cancels all transactions (including those of type A), there will be plenty of legitimately angry customers. They tried to play by the rules, and yet had their sound investment (and associated gain) taken away. On the other hand if Zecco cancels only transactions of type B (but lets type A go through), they will lose a lot of money: for that one day everyone was only able to make investments that made them money! What a deal! Yet if Zecco says it won't cancel any transactions for amounts below a person's previous buying power, people can still argue that their strategy was disturbed by the mere presence (and psychological effect) of all that other money sitting there.

      And a further complication: what if someone makes two $15k investments on that day? They spent over their 'real' limit. But which transaction was the one that spent the "money they don't actually own"? Also, having an extra million $ is obvious. But a customer could legitimately claim that they thought they had $30k in the account (when it fact it should have been $20k). It's up to Zecco to report it correctly, and if they don't then customers will become legitimately confused and may make trades somewhat beyond their previous buying power. Even if they are trying to act in good faith.

      All this to say that this is going to be a mess for Zecco to sort out. They will likely have to make concessions to numerous customers, which will cost them a ton of money.

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