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stories filed under: "trading"
Too Much Free Time

Too Much Free Time

by Mike Masnick

Mon, Apr 6th 2009 4:55am


Filed Under:
april fool's, fake money, trading

Companies:
zecco



Bad April Fool's Joke: Give Away Millions In Fake Money; Users Start Trading With It

from the how-to-define-a-bad-idea dept

See Update Below. Well here's an idea that must have sounded good at one point. Upstart online brokerage Zecco (already known for pulling attention-grabbing stunts) had the bright idea for April Fool's Day to load up users' balances with much more money than they actually had -- sometimes millions more. Except... it looks like they never bothered to make sure people couldn't use that money. So plenty of users started making trades with the fake money... and 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. Update: Consumerist has updated their post with a message from Zecco claiming that it was not an April Fool's joke, but noting "Some clients may experience incorrect display of Buying Power and Account Balances." It's not entirely clear how those "incorrect displays" were apparently off by millions in some cases. Update 2: Zecco is again insisting this was not an April Fool's joke and that it was "a bad feed" from a vendor. It's not entirely clear why it took the firm 5 days to explain that, however...

22 Comments | Leave a Comment..

 
Scams

Scams

by Mike Masnick

Mon, Jan 28th 2008 6:21am


Filed Under:
billions, fraud, jerome kerviel, security controls, trading



Exactly How Do You Hide $73 Billion In Fraudulent Trades?

from the bet-big,-lose-big dept

At the end of last week, the latest banking scandal started hitting the wires as news broke of a low level trader for the French bank Societe Generale was somehow able to lose the bank $7.2 billion by sneaking around various control and security systems to make a series of complex bets, well beyond what he should have been allowed to do. Many people are comparing it to the case of Nick Leeson, who brought down Barings bank over a decade ago -- though, with Leeson, it only took a little over a $1 billion. And, over the weekend, the details got worse. That $7.2 billion loss came on bets up to $73 billion. It certainly raises plenty of questions about the controls that are in place. No matter how sneaky you are, you would think that $73 billion would be pretty hard to trade without anyone noticing. Apparently not. The trader in this case, Jerome Kerviel, supposedly had a detailed understanding of the security systems thanks to an earlier job at the bank, that involved monitoring the trading systems and then used other people's accounts and falsified documents to hide his tracks. Even so, you would think that someone would have taken notice of $73 billion moving around. Societe Generale claims that, unlike Barings, it can easily survive this fraud and will even turn a profit. Of course, at the same time, it also announced it needs to raise $8 billion -- and given the size of the loss, that certainly makes it sound like the bank needs to replace that money pretty quickly.

21 Comments | Leave a Comment..

 
Deals

Deals

by Joseph Weisenthal

Wed, Aug 22nd 2007 3:08pm


Filed Under:
brokerages, dotcom, trading

Companies:
e-trade, td-ameritrade



TD-Ameritrade To Place Buy Order For E-Trade?

from the discount-deals dept

It's being reported today that two companies closely associated with the last stock market bubble, TD-Ameritrade and E-Trade, are in talks to merge. Both companies have evolved to become comfortably profitable established firms, but throughout their history they have been dogged by steep price competition and high customer acquisition costs (as evidenced by the constant stream of TV advertising from both firms). Furthermore, active management of individual stock portfolios has never again reached the heights experienced during the bubble, as investors have turned to things like ETFs and other index funds, which don't lead to as many commissions. A merger could help both sides reduce costs, although there's still a lot of competition in this space, which would make it hard for them to raise prices too much. That being said, Dealbook points to some reasons to doubt the significance of these rumors. The two sides have said in the past that they'd be interested in exploring a combination, but there's nothing new now to suggest a deal is imminent. Furthermore, any deal would be beset by organizational challenges, as TD-Ameritrade is a unit of the larger Toronto-Dominion Bank, meaning E-Trade management would have to step out of the way. So, most likely, the two sides are likely to remain separate, and you can expect a continued flood of annoying brokerage ads (until the next time the market nosedives, that is).

1 Comments | Leave a Comment..

 
Wall Street

Wall Street

by Joseph Weisenthal

Thu, Aug 2nd 2007 12:28pm


Filed Under:
trading



Fat Finger Reverses Stock Market Slump

from the fat-finger-fat-profits dept

The stock market has been taking a pounding over the past several sessions, but yesterday's action brought some relief as the major indices surged towards the close. There was no obvious catalyst for the move, although late-session reversals aren't all that rare. So, should investors be relieved that buyers stepped into the market? Not necessarily -- it would appear that the late really was simply caused by a so-called fat finger error. Basically, a trader at a major Wall Street firm messed up on an order and then had to do some major buying in order to cover for the mistake. Other traders, recognizing the situation, piled on, taking advantage of the sudden buying panic. These type of human errors happen from time to time, sometimes with great significant consequences for the offending firm or trader. In 2005, one such error at a Japanese firm ended up costing $251 million. This time, the consequences probably won't be so severe, although it still seems like it would be a good idea to develop some better preventative controls.

4 Comments | Leave a Comment..

 
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