Sample Claim – Trade Error

What happens when a trade error results in a financial loss? Consider this sample claim below and the steps that could help prevent future errors.

Description of Incident: Trade Error

  1. Security order was submitted twice to the broker, instead of once.
  2. The duplicate order occurred on August 15, 2014.
  3. The financial impact of the duplicate order is a loss of $185,764.56.
  4. Studley Financial Services is the insured.
  5. Studley Financial Services is the claimant. The broker, Chuck Shultz & Co., has held Studly Financial Services financially responsible for the duplicate order.
  6. Chuck Schultz & Co. contacted Studley Financial Services at 1:50 PM CST on Monday, August 18th. Chuck Shultz & Co. notified Studley Financial that there was an order yet to be allocated to client accounts and this order was identical to one previously submitted. Studley discussed these orders, determined one was a duplicate, and decided to contact Shultz to correct the duplicate order as soon as possible. At 2:08 CST, Studley contacted Shultz to offset the duplicate order.

Steps to Avoid a Recurrence:

  1. Studley Financial is working with a consultant on reviewing and improving trading procedures to avoid future errors like this one as well as unanticipated errors.
  2. Effective immediately, a financial planner will review block order lists on the screen or via screen-print before the trading associate submits the block order. Studley Financial will also review the order status screen or screen-print to check for duplicate trades on the day of block trades.
  3. Studley Financial has contacted Shultz about updating their trading software to prevent unintended duplicate orders.

POSTED: 09/23/14