The Secret Broker: Fat finger tales and putrid briefcases that make online trading smell rosy
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Deep buried memories came flooding back to haunt me this week, the type that are reserved for death time confessions, after I read an article on how a simple error can lead to unintended outcomes.
Like the time when I and a few work colleagues were travelling on the last train home after the annual Friday Christmas Party. One of the more senior of the group told us he was feeling a little worse for wear.
With the train being semi packed and with most of the other passengers in the same state, I told him not to worry and reached up, took down his briefcase and as discretely as possible, he threw up in it. When he had finished, I subtly put it back.
At the following Monday washup, we asked him how his wife had reacted in the morning.
He explained that she had cheerfully brought him a coffee in bed and then told him that she had been through his briefcase and completed the paperwork he had brought home.
Somewhat lost for words, as she handed the forms to him, he realised that I must have given him another passenger’s briefcase the previous night, and at that very moment, somewhere, someone else, who was completely innocent, was having an awkward conversation with his wife about the state of his briefcase.
Back to the article I read. It was about a UK government employee who was instructed to liquidate a Manchester-based company called Taylor & Son.
In error, he clicked on Taylor & Sons, which was based some 200 miles away in Cardiff and started the liquidating process.
His fatal slip of the mouse cost the UK government £8m in compensation, as it caused complete mayhem to the wrong company. It turned out that Taylor & Sons was making about £35m a year at the time and the error triggered so much creditor panic, that within six months a real liquidator was appointed and the firm and all of its employees across six factories were made redundant.
A successful 200-year-old company had died because of the ‘S’ in its name.
I can tell you now, that there is not a seasoned broker in the world who has not stuffed up an order.
Just like my chiropractor once said to me, a nurse who says she does not have a bad back is a nurse who lies, so it’s the same if your broker does not admit to the odd trading error.
I have done it a few times in my career and have these awful, embarrassing and costly mistakes hidden away and deeply buried in my memory.
Here’s a horror of a broker story from 2005. A Japanese broker got muddled when asked to sell 1 J-Com share at ¥610,000 ($8,483.73).
Maybe he’d had a bit too much sake for lunch because he managed to get it completely the wrong way round and sold 610,000 J-Com shares all the way down to ¥1.
The unwinding of this error cost his firm ¥40 billion or $US367m ($541.9m).
In Australia, Buru Energy (ASX:BRU) once went on a run after a renowned Japanese tip sheet had tipped Blue Energy (ASX:BLU) as a screaming buy.
Because of pronunciation problems, when the orders were placed, the broker thought they said Buru Energy and the stock went on a big run and got a speeding ticket from the ASX and they could not explain why their shares had gone up.
For online ASX traders, it is not easy for you to make a mistake, as you cannot put in a buy order for more than the money you have on account and you cannot put in a sell order for more shares than you hold.
Everything for you is linked together, which is unlike the machines that brokers are allowed to use. They can buy and sell any stock they wish and for as much as they like, as everything is later reconciled by their back office.
Settlements are completed without being pre-linked and that is how mistakes can happen.
For once, the online retail traders have a jump on the brokers. Now that makes a change!
The Secret Broker can be found on Twitter here @SecretBrokerAU. Feel free to contact him with your best stock tips and ideas.