If your share platform did a Madoff

jabba42

bowlhead99 wrote: »

Expensive, but feasible to hook up a computer system to a live streaming market data source. Not really hard, given that virtual account portfolio or "trial" services exist. You would just need to produce contract notes every time someone 'bought' or 'sold' something. People would sell and redeem out every so often and you could pay them, if you had enough coming in from other investors which was destined for your nominee account compared to people wanting physical certificates or wanting to transfer out in specie.

Clearly it wouldn't work if you had a reputable auditor but if your brother in law ran a corrupt or incompetent audit firm to give you the sign off...

Sounds like it has even crossed your mind

lvader

Biggles wrote: »

Or, maybe, one very good website and software engineer?

Are we talking about a scam website that might fool a few hundred people over a short period or the possibility that shares bought with a Hargreaves Lansdown like provider could all be fake? If the later I don't think it would be possible.

IronWolf

Ponzi scheme is unlikely, but a firm embezzling its clients funds can and does happen. MF Global did it only a couple of years ago.

Glen_Clark

lvader wrote: »

Are we talking about a scam website that might fool a few hundred people over a short period or the possibility that shares bought with a Hargreaves Lansdown like provider could all be fake? If the later I don't think it would be possible.

Many people thought Madoff wouldn't be possible. But I agree with the likes of Hargreaves Lansdown or Jarvis (x-o) a major fraud would be far harder because they have millions of small trades, more people would have to be in on it. Wheras Madoff had comparatively few trades (of much higher value) which he was able to keep to himself. Madoff seemed to do a lot by word of mouth, a nod and a wink, saying the scheme was only for the privileged trusted few, insinuating clients were getting the benefit of inside information which encouraged them to keep their mouths shut - a classic con man trick. Wheras the likes of HL and Jarvis advertise their services to the widest market possible.
So I have no reason to think there is any fraud. Just pointing I can't see any investor protection above £50k.

Glen_Clark

badger09 wrote: »

:eek: My day just got so much brighter :eek:

Oh well, at least I have my holiday in Gloucestershire and Somerset to cheer me up :cool:

Don't let it spoil your holiday

badger09

I was aiming for irony, but obviously failed miserably

Gloucestershire & Somerset = badger cull :sad:

That would probably spoil my holiday

lvader

IronWolf wrote: »

Ponzi scheme is unlikely, but a firm embezzling its clients funds can and does happen. MF Global did it only a couple of years ago.

Again something slightly different, if I had a lot of money sitting as cash in an account or in a particular fund I'd be concerned. I'm not worried that one of these large online brokers would sell me fake shares or sell them without my consent.

Glen_Clark

lvader wrote: »

Again something slightly different, if I had a lot of money sitting as cash in an account or in a particular fund I'd be concerned. I'm not worried that one of these large online brokers would sell me fake shares or sell them without my consent.

As I understand it, up to £85k cash is covered.
Wheras only £50k investments is covered?

bigadaj

Glen_Clark wrote: »

As I understand it, up to £85k cash is covered.
Wheras only £50k investments is covered?

Yes but generally the guarantee is multi layered. As well as being held in separate accounts assuming different funds then those funds also have the cover. Obviously doesn't help with fraud but that's possibly a reason to stick with the larger platforms?

grey_gym_sock

if you're well over £50k, there's perhaps a case for using more than 1 platform to spread your risk, and perhaps also for holding some share certificates (to avoid using a platform - though this doesn't work for ISAs or pensions).

though i wouldn't stick to £50k per platform, or it could get very complicated. but perhaps S&S ISA on 1 platform, pension on another, unwrapped in a third.

you should perhaps also check which nominee company the platform is using to hold the investments, as it could either be 1 associated with the platform, or an outside company. so it's possible that 2 platforms share the same custodian. (having said that, i'm not sure who the nominee is for the platforms i use ...)