Shorting Dispute with my Broker today E-Trade

Discussion in 'Retail Brokers' started by FuturesNoob, May 14, 2010.

  1. Hi guys,

    I was hoping someone could tell me if I am right or wrong in this situation. I am still a little pissed off about what happen.

    Earlier this morning I log into E-trade and had plan on shorting TIVO. I set aside $7,000 cash for this and $14,000 in margin able securities.

    The system did not allow me to short at 900, 700, 600, 500 shares saying each time that I had insufficient funds. I was able to finally short 450 shares. Which came out to become $5200 Market Price.

    I called in immediately and was "helped" by a clueless employee. I was trying to get the rest of my order filled at the market price that I had put into the computer. I had them put a trade inquiry in for the maximum number of shares I would have been able to short.

    I just got a call back from them saying there "system" executed the correct order because it was not able to initiate the trades at the market price due to the price drop but had basing it off the prior price before TIVO dropped 30+ %.

    I call bullshit on this, and it seems like they do not want to cover the losses due to the additional drop the stock took. Am I wrong and that much of a noob?
  2. LeeD


    From your description I am not sure what exactly happened, but

    1) If you got executed at a price that is far from the market price you can probabbly trace your order to the exchange and see what heppened. In this case it's probabbly the broker error and you can claim full compensation;

    2) If the issue is the broker didn't allow you to short sufficient amount of shares when the price was good, any recorse will probably be very limited. Ultimately, a) most broker agreements say the broker provide leverage where they can at their discretion; b) IT infrastructure failures are not that uncommon and a broker cannot be blamed for any resulting loss of profit.
  3. Thank you very much Leed for the tip!. I have been lurking on this site for quite a while and it seems everyone on here is knowledgeable somewhat.

    Who do I claim this compensation too? It seems like the supervisor said there is nothing they were able to do.

    I was with Scottrade and never even HEARD of this problem.
  4. LeeD


    For your order you have the size, the price and the execution time. Ask the broker on which exchange the order was executed.

    Many exchanges make trade records public. So, check if at this particular time you find an execution matching you size and price.

    If the execution is found, a) check if the proice is way off - you may enquire at the exchange about it; b) if you experienced an execution delay from broker, check any earlier orders to see if frontrunning is in place.

    To reiterate, it's unlikely you get any compensation of you couldn't execude in the size you thought you could.

    However, if the price you got executed at seems out of the ordinary, start with exploring the price action around the time the execution happened.
  5. Just got off the phone with a few more clueless "brokers".

    1). Apparently there was never an order executed so they could not route it to a specific exchange

    2). Apparently the margin changed from 50% 100% at the time for TIVO aka meaning I could not borrow any additional funds beyond what I had. ($7000).

    3). If this is true, than why would it only let me place 450 shorts x 11.66 market price/executed order = 5247

    If it required me to have 100 percent cash, I should have been able to short up to 599 shares ($6984) without having an insufficient funds notice pop up.

    My order could not even execute at 500 shares.

    I just find this whole thing ridiculous. I have been on the phone with almost 6 different represntitives at E-trade and each one of them try to come up with an excuse to what my order was rejected, which don't even come close to reasonable.
  6. LeeD


    Are you happy with 11.66 you received for 450 shares? If not you can track down the order to the exchange.

    If you are unhappy about the missed opportunity because the broker could not provide the size, you can only search for another broker.