What’s the compliant way of correcting trades that were inadvertently placed in the wrong client accounts while others who were supposed to get it didn’t?
credit clients with interest (those that incorrectly got em) remove from clients who incorrectly got them place into client accounts that didnt get em
Do the clients that didn’t get them receive any compensation?
they got interest for free
So both the people who got the shares by mistake and those that were suposed to get them but didn’t get interest? both parties get interest?
in normal course, if that stock goes up, your client would not be quiet. So that buy order (previously ordered at lower than current price ) should be settled at lower price for client. the difference must be beared by brokers. who wants rf interest rate when your ordered stock is skyrocketing .
flapechino Wrote: ------------------------------------------------------- > in normal course, if that stock goes up, your > client would not be quiet. > > So that buy order (previously ordered at lower > than current price ) should be settled at lower > price for client. the difference must be beared > by brokers. > > > who wants rf interest rate when your ordered stock > is skyrocketing . that is maybe real life. That is not what CFAI recommends ( i didnt see it anywhere in texts)
YOu must correct the trade by removing the stock from the wrong portfolio and crediting them any costs associated with the trade and then credit hte account with which the trade was supposed to go to with any unrealized gain that should have been accrued if the trade was done right.
bigwilly Wrote: ------------------------------------------------------- > YOu must correct the trade by removing the stock > from the wrong portfolio and crediting them any > costs associated with the trade and then credit > hte account with which the trade was supposed to > go to with any unrealized gain that should have > been accrued if the trade was done right. so you have to credit transactions costs back too?
Yeah, you can’t hurt the client b/c of your mistake.
bigwilly Wrote: ------------------------------------------------------- > YOu must correct the trade by removing the stock > from the wrong portfolio and crediting them any > costs associated with the trade and then credit > hte account with which the trade was supposed to > go to with any unrealized gain that should have > been accrued if the trade was done right. So where does the interest come into play because I’ve seen a few questions where they credit interest to the investor’s account which didn’t necessarily reflect the increase/decrease in the value of the investment had they been holding it.
That too. The interest is from the lost interst on the funds used to buy the funds. So if you used $1,000 to buy IBM when i wasn’t supposed to get it, I keep the gain and plus get the interest on my $1,000 