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April Fools Sees Fake Extra Millions For Users of Brokerage Site
Upstart online brokerage site Zecco had an unfortunate April Fool's day snafu that they are claiming was an honest mistake. Users logged on to find larger balances than they should have, sometimes millions of dollars extra, and many of those users started trading with the nonexistent money. Happy April Fool's Day. "... when Zecco realized it, the company apparently started to force sell, even at a loss, charging the losses to the customers along with a '$19.99 broker-assisted trading fee.' Oops."
the conservative, sandwich-heavy portfolio pays off for the hungry investor. - Dr. Zoidberg
Sig this!
It's like a performance art piece about our worm-riddled crony capitalist mess!
Quit making excuses guys, and head on down to the gallery...
Seriously. I thought all financial institutions had given up on using Perl for their back-end systems. One misplaced _$ and suddenly everyone is swimming in money.
Next time use a strict typing language like Haskell.
I logged in to Zecco 4/1 at around 9:30 AM... my cash-on-hand was off by about $1.6 MM (balance was 1.8 MM instead of 0.2 MM). I immediately instructed Zecco to wire me the excess funds... and the funds hit my bank account at 12:02 PM!
As of today, the money is still in my account, but there is a hold on it. Apparently, the funds transfer was initiated properly, fully authorized... so my bank is holding the funds while I accrue interest on it until they determine final disposition.
Oh hell, who am I kidding... I don't have 0.2 MM in an online investment account. Hell, I don't think I have 0.2 MM is assets, unless you include my wife & daughter, who I could probably sell for that much if I found a good buyer or if there was a bidding war.
Oops... was that my out-loud voice?
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
TFA and the summary both state that the broker "started to force sell, even at a loss, charging the losses to the customers". However, they are silent on what happened to those who were ahead on their trades. Did they get to keep the profits?
Those who can make you believe absurdities can make you commit atrocities. - Voltaire
Let me see if I get this straight (understanding that the summary has a typo and should read they shouldn't have on the second statement. Or, and this is the link to the consumerist story.
You log in your account and find a huge sum of money in their. Or, I hit the jackpot you think. Now you go and start using it for trade. TFA is a bit lightly on the details, but looks like this trades were go, meaning basically, market fraud. Not, to add some salt on all this, they go out to reverse the money, sell the stocks people bought at a loss, charge than the loss and ask for a commission??? I see lawsuits coming from so many points it gets ridicule.
From the consumerist post: "west: ummmm, this is ridiculous. so i thought it was an april fools joke, put in an order for SKF, and it went through then Zecco just sold it â"-- more than likely making me take the loss please let me know if any of you experienced this! lol....and they charged me $19.99 for commission". So basically they did an April's fool joke, it went wrong, and they are trying to make people pay for their mistake.
Impressive. They do get credits because you need a lot of balls to joke with the market after all it went through recently. And no, I don't buy the "honest mistake" line.
--- "When you gotta do something wrong. You gotta do it right. (Fighter)"
First of all, it obviously WAS an honest mistake. Even if they millions showing up as "buying power" were intended as a joke, the fact that the system allowed them to be used for actual purchases, most certainly was a mistake.
Now, when you have a brokerage account and are trading stocks, you should know what you are doing and be responsible for your actions. So, when you see several million in you account, you should know as much to not start investing them. If it is not your money, at best it will be considered a margin trade which has to abide to SEC mandated rules. IIRC on a margin trade you have to have equity worth 25% (or whatever the figure is) of the security that you acquired on margin. Otherwise the broker has to automatically sell to cover. If you don't know things like that, you should not be trading at the stock market.
Violence is the last refuge of the incompetent. Polar Scope Align for iOS
I appreciate a good Perl joke as well as the next Perl hacker, but if you wedge a "_$" into your code you'll just get syntax errors. Did you mean "$_"? That error (misplaced default parameter) I've seen quite often, mostly among Perl nubs.
I can't comment on the frequency or trend of Perl back-end systems. Most back-end systems I've worked with are J2EE.
Your ideas on type-safety are intriguing to me and I wish to subscribe to your newsletter.
Welcome to the Panopticon. Used to be a prison, now it's your home.
Hahaha, surely, thou art on the highway to Hell.
Ducketh thou, the swine that thou hast cast your perl before will rise up and smiteth thee.
Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong fix.
Screw ups like this is why I insist that all financial institutions that I have business with send me paper statements.
...people aren't that stupid.
More likely many of them realized "Hey, this could be an aprils fool or then not. I don't know. I could check it and get confirmation oooor.... I could act as if it wasn't and sue the hell out of them if this is!"
While nobody should be stupid enough to fall into that joke for too long, no organization should be stupid enough to make jokes with large sums of money.
... if a ridiculously large amount of money shows up unexpectedly in your bank account, rushing out to spend it wildly before the mistake can be caught is not actually the smartest of the available options. The authorities look disapprovingly on such activities.
Life needs more saving throws.
It's true, we're doomed, I tell you!!!
*reaches for tinfoil hat*
More seriously, original post is here. They're claiming it was a mistake in a feed...
http://preview.tinyurl.com/ca37sl
An abstract...
"The surge in "Buying Power" was an accidental extension of credit to the customers' accounts. Actual funds were not deposited therein. After the error was discovered, the mistaken credit was withdrawn. However, not before some executed trades on the lines of credit, including including one guy who bought over $1 million in shares. The company then acted to reverse the errors, saying on their blog, "Except in a very small number of egregious and fraudulent cases, customers will not be responsible for losses (or gains) incurred for trades in excess of their buying power."
Wonder how they define "egregious and fraudulent"?
*removes tinfoil hat, reaches for lawyer*
Are you illiterate? From the summary: Upstart online brokerage site Zecco had an unfortunate April Fool's day snafu that they are claiming was an honest mistake (emphasis mine).
From the linked "article": Consumerist has updated their post with a message from Zecco claiming that it was not an April Fool's joke,...
And from the "real" article that is linked from there: Online brokerage site Zecco accidentally increased 1% of their customers' Buying Power balances by millions on April 1st, leading some customers to wonder whether it was a system glitch or some horrible April Fool's joke. It turned out to be the former.
And from Zecco itself: "Additionally, we want to make it clear that contrary to some reports, this was not in any way intentional and was not an April Fool's joke. We take the integrity of our customers' accounts very seriously and we have taken measures to ensure this does not happen again."
Whether or not you believe Zecco is a different matter, but the only thing pointing towards it being an April Fool's joke is speculation, and this is flatly contradicted by the claims of Zecco, and the summary somewhat accurately conveys this.
If a large amount of money shows up in your bank account, and you have no idea how it got there, spending it WILL land you in jail if you withdraw the money and hide it or blow it.
This is the case even if you ask the teller if the money is yours and he/she says yes. Once they figure out the truth, they WILL hold you responsible for the cash.
I see no difference between that and this case. These folks knew they did not actually have an account worth millions, yet they bought stock based on money they did not have. Gee, what did they think was going to happen; of COURSE the broker is going to get their cash back ASAP.
If I was the broker, I would waive the trading fees for selling your shares, but would hold the account holder responsible for any losses. Maybe, in a goodwill gesture, sign over the gains (if any) also, but that would be the limit of my generosity.
SirWired
Poorly done April Fools joke.
Come on. Anyone with half a brain could figure out that no financial company would do something like that just for a "joke". Their liability for lawsuits and shit would be so obvious that they wouldn't even dream of doing that.
However, it would be more likely that it could have been an April Fools' joke of some idiot employee thinking it was funny to do such a thing without company approval. And according to their press release, likely was thrown out the door.
From their press release...
On April 1, 2009, one of our vendors provided Zecco Trading with an incorrect data feed which caused some customers to see erroneously high buying power.
[...]
Additionally, we want to make it clear that contrary to some reports, this was not in any way intentional and was not an April Fool's joke.
I think a car analogy is due.
Zecco made the error. Zecco eats the consequences. Period. Why should people be held liable for someone else's mistakes?
So you drive into work, and manage somehow to park your car in the wrong spont, belonging to and reserved for a neighboring business. Upon leaving the office to head home, you discover the mistake, and find the parking spots owner has stripped it down to the frame and sold all the parts on craigslist.
Explain why you should eat these consequences.
If maybe your neighbor had called a tow truck and had the vehicle impounded, sure I could see you having to eat that.
But I'm not following why you should have to eat your neighbors blatant theft of something he knew wasn't his. Just because you put the car in his spot is not a valid reason for him to think its now his car. Similarly, if the bank makes a mistake in your favor with your account, its not valid to assume the money is yours. The bank should eat all the costs of fixing their mistake, but if you attempt to try and keep or use the money that isn't yours, you become liable for that. Their is lots of supporting precedence for this too.
People have no obvious way of knowing they're fake. People do what people do - use the money.
And people who have done the same type thing with ATMs find they are fully responsible for their spending habits. If today you have $1,000 in the bank and tomorrow you find $1,000,000 in your account, it is rather obvious you didn't just make $999,000 dollars over night. If you spend it, you just spend dollars out of your original $1,000 and not out of your desired $999,000. If you go in the negative, you're still responsible for the negative balance. At least that's how the courts have treated these cases in regards to ATMs. And guess what, they even had to pay their applicable ATM fees.
use haskell;
I think there is a world market for maybe five personal web logs.
Yes, that's correct.
If you make a deposit in your account, you cannot cash it until either (1) it clears or (2) a hold is placed on your account in the amount of the check to cover it in case it bounces.
Since your buying power was not affected, this means that you are able to treat the deposited item as cash, investing it in securities. This is only possible if there is a hold on equivalent funds in your account.
What is boils down to is that in order for the funds to be available for you to purchase securities with, a hold has to be placed on covering funds. If Zecco instead had a policy where funds could not be invested until the deposit clears, then you'd be able to withdraw the $10000 without a problem.
Say your buying power is 1x your deposits. Your despoits were 10,000 (100% cleared) and $500 (not cleared). You buy 500 of securities, and withdraw $10000. Then the check bounces. Now you have $0 deposits to cover $500 of securities. Uh-oh... FTC securities violation.
Because of the fact that Zecco needs to make funds available for investment immediately (I dunno if this is statutory, or if it's to compete in the marketplace), they have to place the hold on your $500.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai