I found this post interesting...its From the Trading Desk...
(dsg...wouldnt surprise me if the broker had been told this...and that is why securities malpractice insurance is so high ;-))))))))
To: +steve goldman (3070 )
From: +Craig Richards
Wednesday, May 20 1998 10:11PM ET
Reply # of 3073
Lessons learned from the trading desk - a saga of looking for justice from my broker.
This is a long post, but I thought it might be helpful to others to share a recent
experience I've had.
Although I have been following (and learning from) this thread for a while, I recently
placed an order that caused me to really pay attention to the lessons Steve has been
teaching on this thread. There's nothing like having my own money at stake to really
drive these lessons home.
Last Friday I placed an order to sell short LCOS at 66 before the market opened.
Lycos opened at 65 3/8 x 1/2, printed as high as 66 1/2 in the first few minutes of
trading, and then went down from there. I called my broker after the open to inquire if I
had been filled, and was informed that I hadn't been filled. I knew from reading this
thread that my order should have been displayed if it improved the market, and I saw
the ask as high as 66 1/4, so I knew my order should have been displayed and then
filled. I asked my broker why there was no fill. I had to repeatedly explain the Manning
rule to him, and he kept feeding me a line about upticks, and that short sales have
different rules than other stock trades. I called him back later, and he told me that he
talked to a NASD attorney who told him that the Manning rule doesn't apply to short
sales. On the weekend, I looked at the NASD web site, and found the Order Handling
rules at nasdr.com. There are exceptions listed, but
none for short sales. On Monday morning I called the NASD regulators for my area,
and they called me back to let me know that the Manning rules do in fact apply to short
sales. So I called my broker again, and once again he told me that he wasn't required to
display my order because it was a short sale. I gave him the name of the NASD
regulator I had talked to. Later I called my broker again, and he told me that the
regulators in the regional offices don't always know the rules as well as the Washington
office, and that the attorney in Washington told him that there was no requirement to
display the order because it was a short sale. I asked him for the name and number of
the attorney - he gave me the number to call. I called and left a message on Monday
afternoon, and someone from NASD left me a message at home shortly thereafter. I
sent her an e-mail describing my situation, and asked her why the NASD web page said
one thing, while their attorney said another. On Tuesday I got in touch with her, and
guess what? - it turns out the attorney said no such thing to my broker, in fact the
attorney told my broker the Manning rule does in fact apply to short sales, as long as it
was a legal short sale. There are some other exceptions to this rule, including an
exception for abnormal market conditions, which apparently applies to market open
conditions.
I called up my broker again, and once again heard about how hard it is to get upticks,
and that the order needed to be a legal short sale, yada yada yada. I explained that the
reasons they gave me for not filling my order were not valid, that I talked to the person
in Washington they referred me to, and that I wanted my order filled. In the meantime,
Lycos had continued to go down, and I would be very happy to get filled at 66. They
didn't really have a good answer, but said they'd check into it some more, and talk to
the head of trading at their clearing house and figure out if I was due a fill. Today I called
them yet again, and talked to the 2 people who had handled my complaint up until then,
as well as the president of the firm. They explained they had talked to another NASD
regulator in Washington, and she had told them that I was not due a fill. Yada, yada,
yada. So I called her right after I talked to them, and guess what? - that's right, she told
them no such thing. In fact, she told me my order should have been displayed, even
though it was at the market open, and it was her job to investigate these types of things,
and she would be very interested in investigating this particular order, as long as I gave
her my written approval to do so. I got the impression that she really wanted me to file a
complaint, although I don't think she would ever be allowed to come right out and say
so.
So tonight I filed a complaint with NASD Regulation about my order. According to the
regulator I talked with today, there is a possibility that the order was handled correctly,
but she really couldn't know for sure one way or the other without an investigation. So I
should find out in 2 weeks if my order was handled correctly.
A few comments about this experience. I'm really amazed at how much my broker tried
to talk me out of pursuing this issue further, and how he lied to me to try and get me to
drop the issue. Either my broker has no idea about how the rules apply to my orders, or
he brazenly lied to me numerous times. I have also been impressed with how responsive
and helpful the NASD regulators have been. The woman who called me on Tuesday
morning seemed to be very concerned that my broker had misrepresented the NASD
attorney's statements to me. Although she couldn't give me any advice, she did mention
that filing a complaint would be an appropriate thing to do. And of course I'd also like to
thank Steve Goldman for teaching me what my rights are in this situation, as well as
some moral support on Friday when I called him up.
So make sure you know what your broker's obligations are when you place an order
with him, and don't always believe your broker when he tells you you're wrong, the
NASD regulators are more than happy to answer your questions.
Craig |
