Confused instructions

Clauric

I was wondering if anybody could give me some advice on the following situation:

My broker (large firm) emailed me (when it was doesn't matter), suggesting selling a position in company X. The email also suggested buying a position in company AF.

Due to my employer's rules, I couldn't authorise the actions immediately. I got pre-clearance from my company a day or two later, but in the meantime, I had somehow confused company AF with company DA (they share part of their names, but they are unrelated).

I rang my broker, got through to another account manager (mine was unavailable), and authorised the sale of X, and told him to buy DA. I'm fairly sure I told the broker to to buy DA (I know I told them to sell company X, as there are a number of positions in my portfolio), as opposed to telling them to complete the advised actions.

I got the contract notes for the actions today, and the purchase contract note has company AF. I immediately rang my employer's compliance team to advise them of the issue, and they have asked for an explanation of what happened.

I then rang the broker, and ended up speaking to the same account manager who I spoke to last week (my account manager is away on business). He confirmed that he had taken down the instructions as I gave them, including the purchase of DA. He said that he then gave the instructions to my account manager. However, my account manager saw that I had made a mistake in instructing the purchase of DA as opposed to AF. He then purchased AF, without consulting me to clarify my instruction.

Now, my question are:

• Should my broker/account manager have contacted me to clarify the issue?
• Should the broker rectify the mistake at no cost to me?
• Is there any rules that a broker must follow when there is confusion between an expected order and the actual order?
• If the calls are recorded, can I get a record of the actual call where the instructions were given?

Any advice, or similar personal anecdotes (and what happened in the end) would be greatly appreciated.

euroboom13

I had I similar problem ,where I informed my broker in "writing" what to buy, and on his end, he misread and ordered by phone the incorrect buy.

The wrong stock arrived in my name and my broker rectified the error, cost neutral to me.(but it was registered as a buy/sell/buy to me) .

I can`t see why your broker wouldn`t correct his error cost neutral to you.

For ever odd

Is AF the company you originally wanted to buy?

Clauric

For ever odd wrote: »

Is AF the company you originally wanted to buy?

AF Is the company that was bought, and that was originally in the advice note from the broker

gordongekko

Clauric wrote: »

AF Is the company that was bought, and that was originally in the advice note from the broker

But you actually made a mistake and ordered another company that actually went up in value??

Clauric

gordongekko wrote: »

But you actually made a mistake and ordered another company that actually went up in value??

AF was the company that was bought. I've no idea if the position had gone up our down, but that really isn't the point.

The point is that I got permission to trade in DA, and I gave instructions to my broker to do the same. My broker went and changed the order without consulting me (they've since told me this is exactly what happened). My compliance guys are going ballistic (reasonably so).

My questions were my broker should have done what they did; can they legally do what they did; and should they put me back to where I would have been had they not done something they were not asked to do?

I should point out that my compliance guys have said that what happened is a direct breach of my employment contract and could lead to my dismissal!

gordongekko

Clauric wrote: »

AF was the company that was bought. I've no idea if the position had gone up our down, but that really isn't the point.

The point is that I got permission to trade in DA, and I gave instructions to my broker to do the same. My broker went and changed the order without consulting me (they've since told me this is exactly what happened). My compliance guys are going ballistic (reasonably so).

My questions were my broker should have done what they did; can they legally do what they did; and should they put me back to where I would have been had they not done something they were not asked to do?

I should point out that my compliance guys have said that what happened is a direct breach of my employment contract and could lead to my dismissal!

No the question is what do you expect to happen

Clauric

gordongekko wrote: »

No the question is what do you expect to happen

At the very least, I would expect my broker to put me back into the position I would have been in, if he had executed the trades that was instructed.

However, he seems to be reluctant to do this, on the grounds that I made a mistake.

Sonnenblumen

I would expect that all calls to brokers are recorded as standard? In which case it should be a straight forward matter to detect what was the original instruction?

daheff

Clauric wrote: »

I should point out that my compliance guys have said that what happened is a direct breach of my employment contract and could lead to my dismissal!

To be quite honest with you, I don't think your compliance guys would have a leg to stand on if you were dismissed and it went to court. You gave an order to purchase what you advised them you would purchase. Through no fault of your own your broker bought something else.

I would do the following:
1- Tell compliance to cop themselves on
2- tell your broker you didn't request to buy the stock they bought and that you expect them to take ownership of the incorrect stock and provide you with what you ordered.

I'd also consider only instructing your broker in writing in future specifying ISIN/BBerg code/Reuters codes to identify what you are purchasing/buying

this is no different to if you went into PC world, ordered an IPad, got home and found out you were given a Dell PC.

daheff

Clauric wrote: »

At the very least, I would expect my broker to put me back into the position I would have been in, if he had executed the trades that was instructed.

However, he seems to be reluctant to do this, on the grounds that I made a mistake.

But you didn't make a mistake. Your purchase order was what you advised your compliance team you were purchasing.

You ordered something different to what he had advised you to purchase. He has no way of knowing if its what you intended or not. Hes assuming you wanted to do what he advised -and it sounds like hes trying to cover his ass here (I appreciate you did actually make a mistake in your order not being what he advised originally, but that doesn't mean he can assume you made a mistake).