I placed a order over the phone, to buy a mini commodity, which I clearly specified and then mentioned that it was closing a position, which I thought would also alert the broker to the correct commodity. The order taker read the order back, with a very slight descripancy - omitting the mini part of the contract. I didn't catch this. Then he went ahead and bought the large size contract instead of the mini. When I caught the mistake the market had dropped close to 1K. My broker wants to now hang me with the loss, even though he agrees that I entered the order correctly he is saying that since I didn't correct the order taker I get stuck with their mistake. I need help, any advice would be appreciated.
Perfect nickname, next time do it on size. Always be careful when entering orders, assume people are stupid (which they usually are). You wont get your money back, so take it like a man.
Many brokers keep all the conversations on tape. Ask him if you can come and hear what's on the tape. The problem might be that you confirmed his wrong order. Confirmation is used to be sure there are no wrong orders. He will use your confirmation as an excuse. Try perhaps to split 50/50 as a "commercial deal". You said :When I caught the mistake the market had dropped close to 1K. How did you know at that moment there was something wrong? The only moment you could know something was wrong was when you had him on the phone? You don't lose 1K on a big S&p in five minutes so you had the position for quite a while or not?
He did his job correctly by repeating the order. You acknowledged him by hanging up. If I ran compliance at your firm, it is YOUR error. I bet you would not try and hook your broker if it went in your favor. Why are you trading mini's verbally anyway?
Thanks for replying. Yeah, I offered to split the loss, and am now awaiting an answer. I am afraid I confirmed the order - its on tape, I just didn't catch that the slug who took the order didn't say mini!!! when he repeated it back. It was a limit order and I assumed it was filled when the soybean market when crashing through it yesterday, when I got the fill finally, the market had gone limit down . . .
I was at a trading desk for a long time, it is correct that what the broker actually repeats is considered as the legally binding order, not what you said before. However, in your case, I see a (very small!!) chance of being refunded, however, a court had to decide about it. You would need an attorney and all that stuff. Your advantage is that you also mentioned the closing. While the trader does not really need to check this at the time the order is phoned to the clerk at the exchange, he should realize it when the fill comes in, or when the clearing is done later. Some examinations should be done how the exact course of action was at the traders desk. Given that the loss was only 1k, mandating a lawyer is pretty useless here, so it seems you should forget it. If you do size at that firm, you could propose to split the loss 50-50, or just take the business elsewhere. (And yes it IS taped, for sure!)
Negotiate a split. Swallow it. It is a jagged pill, but a cheap lesson when all things considered. Now you know what to be cautious about if you were selling 100 contracts in the future over the phone. An attorney, arbitration or litigation will cost you more than your loss. This is a losing trade and if you can't accept it, then it will probably be hard for you to survive. Consider it as if the exchange went down while trading electronically and you had to take a hit. It is not your fault, but it is your RISK. It is probably not what you want to hear, but I will tell you that most other avenues are more expensive so learn from it and move on. Best wishes.
I'd insist they split it with you, and no commissions. It is a MUTUAL error and most likely you'd win in a court. You'd argue the broker had every reason to know you were a mini-trader, didnt listen carefully and because his commiss is based upon transaction had a reason to enter a wrong order. The exact wording on the tape plays a role as well - if it was done in a very hurried fashion as many brokers do, you'd argue they did not take reasonable care. Obviously a small mini-trader can not be expected to act logically under extreme duress as you were at the time. If on the other hand, the broker repeats the order in a s-l-o-w fashion, gives every d-e-t-a-i-l and asks you to r-e-p-e-a-t the order in a slow fashion, you're porked.
Afraid when the broker repeats the order thats the final say , they will definately not swollow the whole loss. I owuld say 50/50 split is the best you can hope for.