Let's look at some of the facts...
First, you have an IRA -- a fixed amount of money in the account.
You have NO buying power since it is not a margin account. If you
place a order which overspends your account then they cancel it.
That's their right and it says so in the account agreement.
Second, MCIC trading activity went thru the roof -- it traded over
10 million shares in about 20 minutes. That is a lot and it can get
very risky for market makers in a hurry. The orders pile up as they
come in because the traders can't fill them as fast as they come in.
In the meantime, the stock's price is changing away from the price it
was went you placed the order. So..... when they get to your order
they review it and see you no longer have sufficient funds to cover
the trade at the current market price. Despite what you may think or
think it should be like, market orders are NOT immediately executed
in situations like this. Technology has allowed us to place orders
faster but in extraordinary situations like this, humans are still in
the mix and there are time delays. That's the nature of the beast.
Third, market makers DO NOT like to carry inventory. The goal of a
firm's MM (any firm) is to be flat at the end of a trading day. If
he isn't, and major news occurs overnight or before market, then the
risk exposure is high -- well into the millions. This idea that
Schwab (or any MM) would screw you to keep a stock's shares in their
inventory is BS. It is simply not the way Wall Street works because
it is very risky and traders don't like losing their jobs. MCIC at that time was only rumored to being bought out and neither MCIC or
BT had confirmed or denied anything. If they keep such shares and it
turns out to be false, then they get killed.
Schwab didn't contact you until after the stock was halted? Well, let's think about this for a moment. They surely had thousands of
customer orders just like yours. Where was the manpower to call all
of you in a 20 minute time frame?
They also cannot arbitrarily change your order to 398 shares. Why?
It's against the law. If they did and you bought at 29 or whatever
and then the buyout turned out to be false and MCIC was 23 right now
you'd be unhappy then too. It's a no-win situation.
You're probably still pissed off. That's understandable but if you
want to trade the market, you have to understand how it works.
You may feel you were screwed, but they operated within the rules and any other firm would do the same. You know I'm right about that. It sucks but that's life. I'm telling you the facts and I have no reason not to give it to you straight. Good luck.
RR |
