April Fools Sees Fake Extra Millions For Users of Brokerage Site 280
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."
What about those who were ahead on trades? (Score:5, Interesting)
I smell a huge lawsuit (Score:5, Interesting)
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:I smell a huge lawsuit (Score:3, Interesting)
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 decision channels and approve this.
Generally speaking... (Score:5, Interesting)
Re:First of all... (Score:3, Interesting)
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.
Is why 'conficker' is also called 'up and down'? (Score:5, Interesting)
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*
Re:I smell a huge lawsuit (Score:3, Interesting)
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.
NO sympathy for the "victims" (Score:4, Interesting)
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
Re:First of all... (Score:2, Interesting)
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 you messed with your account, the corporation would start to blame you for anything that went wrong.
That is, bidding because you think it's a prank is only somewhat reasonable if you've got nothing to lose - otherwise it's really dumb.
Re:What about those who were ahead on trades? (Score:3, Interesting)
So who gets to define what fraudulent cases means? Couldn't true fraudsters say "I was just playing around because I thought it was joke money!" ?
Re:Why We Don't Need Paperless Statements... (Score:5, Interesting)
Re:NO sympathy for the "victims" (Score:3, Interesting)
Are you saying that if an extra $M accidentally gets put into your account, you can keep it with no repercussions if you pull it out and bury it in the backyard? Where is this? I would think it would be an open invitation for bank fraud.
SirWired
Re:Responsibility..... (Score:3, Interesting)
Certainly Zecco made an industrial-strength error, but given the flaky nature of their "buying power" calculations, I don't really think that the opportunistic folks that performed trades on the credit Zecco extended to them should be penalized beyond repaying the credit they were inadvertently granted, and perhaps a finance charge equal to a percentage of the profits realized. If you lost money and are in the hole to Zecco for half a million dollars, well, that's your problem.
Re:I see the problem (Score:5, Interesting)
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.
Re:Responsibility..... (Score:3, Interesting)
If it's clearly marked on signage that if you park in that spot your car will be impounded, sold etc. then, yeah, you fucked up, tough shit....
Good luck with that. Try selling the cars of the people who park in your spot and you'll end up on charges of auto theft. Pointing at your "clearly marked sign" isn't going get you very far.
If you transfer your money to my account, it's mine. Tough titty on you. If you didn't want me to have it, shouldn't of put it there....
Good luck with that too.
Its clearly marked in the account's terms that this isn't true. And they probably even have a copy on file with your signature on them. And quite unlike your "I will sell your car" sign, this will be legally binding.
Re:Sorry for OT but this needs to be said again (Score:3, Interesting)
(Though I am very active commenter and normally get decent moderations.)
That's my point. I find value in reading posts from folks who often 'get it'. Being able to associate a name or alias to a post allows the style or history to enhance what people are talking about. Posting AC (with the gazillion others) mixes you in with goatse links. ;)
Maybe its just a way to find interesting people or make new friends.
I am not sure if I even want to discuss with the part of the /. that filters out everything not posted by registered users (who are somehow inheritly better people, I guess).
I browse at -1. There are many bright, humorous, and insightful comments at all levels. Although I agree with the mod system, I do not live in a 1, 2, or 3 mistake world. I participate on /. for fun and knowledge. I can very easily ignore/skip the stuff that's not compelling enough.
Re:Call me an optimist but... (Score:3, Interesting)
Exactly.
Funny thing, if I stuck $100 under my mattress 10 years ago, I still have $100.
They had $100, that could have become $10,000, but is now worth $1.25. :)
I look at it kinda like Vegas. If you play, you get free drinks. If you're a high roller, you get your room comped, among other things.
I sat down, and played a few games. When you play, you get free drinks. Cards are high stress, where other players get very upset when they lose and I win. Slots are ... well ... just a waste of energy. All in all, while you're playing, you get free drinks, but you're losing more than the drinks are worth. I evaluated the situation carefully, and figured out the better option. If I sit down at the bar and pay for my drinks, I still see people coming through. I still get the atmosphere, without emptying my wallet. I can drink and it costs me the drinks. I can go to shows and have fun, and when I leave, I still have money in my pocket.
With the stock market, there are no drinks. There are no hot chicks serving the drinks. There are no shows. There aren't even prostitutes chatting you up between high roller moments.
Why the hell would someone play the stock market. It's higher stress in something that you can't really win at. Your money isn't even tied up in the odds that the casino gives. They're tied to emotions of every other stock trader and sometimes even the performance of the business that you gambled on. Screw that.
I started the day today with $200 in my pocket. I came home with $192. I bought my own lunch. There still isn't such a thing as a free lunch, no matter what people say. At the end of the day, I had nothing to do with the economic collapse of America. I worked. I got paid. I even spent $8 for lunch, which went to a small privately owned shop, not to big corporate America.
Probably mostly impacted automated traders (Score:2, Interesting)
Probably a bit late for anyone to notice this...
Everyone is saying "Stupid customers, spending money that thye should know isn't yours!".
Unfortunately if you are running an automated trading system, the process goes something like:
- I want to place a trade
- Ask broker system how much money/margin etc I have available for the trade
- Size trade based on response from broker
- Place trade
usually these systems don't keep an entirely seperate portfolio system (especially retail systems) to ensure that the brokers response is actually correct.