'We lost everything gambling on shares'

Linton

Luz wrote: »

Linton ,

Better example from a customer ,that had an account with this broker,
Here it is ,Customer has share Z on his account because this share has been paid strait way he can buy share Y backed up by share Z buy now worth only 60 , so he bought Y , on the 3 day settlement his credited another 100, backed up share Z worth only 60 and share Y that has not been paid and the value is now 80 , he USES THIS TO BUY NAOTHER Y now cheaper .
So losing money already on all those shares , is already out of pocket ,

So at this stage the broker charges him 40 pounds plus interest and says he had to pay this with 5 working days or they will sale the shares at their end ,so the customer dose,t sale on the hopping to recover his money,So the broker on day 5 sales all this positions ,and the customer lost all his money ,his 100 plus fees all sold for lets say 30 ,pounds altogether ,But the broker adds all buys and sell , after selling his portfolio at a huge loss ,he then credits all that money back ,not 30 pounds but 300 altogether after selling all at a loss .The customer can buy again without any money on the account and no direct debit at all .

I think you may be still confused. I will work through a series of events...

What you do and see...

1) You put £100 into your account.
2) You buy share X for £100. There is now no money in your account so you cant buy anything more.
3) Share X drops in value to £80.
4) You foolishly panic and sell. There is now £80 in your account.
5) You can now buy share Y for £80. You cant buy shares for more than £80 because that is all that is in your account. Your account drops to £0, so you cant buy any more.
6) Share Y drops in price to £50. You panic again and sell, giving you £50 in your account.

From your point of view there has been no credit, you have simply bought and sold continuously limited by the amount in your account.

But behind the scenes things are a little different. The transactions are actually executed 3 days later. I guess the broker is providing a little very short term credit whilst the money is being moved, but this isnt providing you with access to more money than you put in yourself.

Each transaction has a cost, say £10 (+ taxes), which will cover the work done by the broker and any short term, invisible to you, loans. There are no other charges associated with these transactions. The broker cannot come back later and charge you more.

So the key point is the broker is not giving you access to unlimited credit, all that he is doing is enabling you to do faster exactly what you could have done with share certificates.

If you buy shares and sell them later at a loss you will lose money however you do it - that is what happens with many inexperienced investors and I guess happened to the people here. But its no different than for example you incompetently running a business buying and selling off ebay. In that case would you complain and say that ebay were responsible and should have protected you?

Luz

Now another view .

In the States there are margin accounts ,where this customer would have to sign for this account ,you can only borough 50% of you,r portfolio ,in which case this customer having paid for share Z , he could only borough 50% of it no more .But the system that barclays stockbrokers apply,s ,the customer loses more than he invests ,as they credit the account with money ,he does not have in his portfolio neither do they know if he has got that money to pay for what they lend .

noh

Barclay's marketmaster has a credit facility. Initially £7500 but then increased as your portfolio value increases. You can effectively trade on margin.
The subjects of the article used this facility apparently not understanding the risks involved and over a period of three years lost £180k.
No ones fault but there own.

talexuser

Ok, let's try one more time. They had £180,000 to start with. The credit was £7,500 trading allowance which had to be repaid in three DAYS. He estimates the total charges he incurred were £17,400 over three YEARS. On the basis of these figures I cannot see how you can argue that the trading allowance or fees wiped him out. The thing that wiped him out was bad buying decisions for which he alone is responsible.

Luz

No
A , I deposit 100 and buy a share share A, .

2, strait away I can reinvest this 100 that now worth only 80 and i buy share B.
2, on third day I get a credit of another 100 backed up buy share B that now worth only 90 and has not been paid ,but my account has been credit with another 100 rather than on minus and i buy share C . Then the broker ask for 40 pounds plus interest,s .Gives 5 days to sell everything or they will sell .

So they sell all at a loss ,buy now my 100 on share A,keeps dropping ,and buy now from worth 80 it will worth 60 so from this i have to sell ,to pay for the losses on share B and C . hope it will be enough .

If share B and C delist i will owe the broker 200 pounds as my inicial 100 share will not be enough to pay .

Hope it helps

Linton

noh wrote: »

Barclay's marketmaster has a credit facility. Initially £7500 but then increased as your portfolio value increases. You can effectively trade on margin.
The subjects of the article used this facility apparently not understanding the risks involved and over a period of three years lost £180k.
No ones fault but there own.

Is this in addition to T+3 coverage or a replacement for it?

Luz

well you got there MARGIN .

So there is where you brake the COBS,10.4 .C you can lose more than you invested .

Luz

The main point of the article was to worn others not to get involved in the same situation .

Someone who just wants to start invest some money ,or get a grasp on the markets ,has to be treated as such ,not be given an account like this a MARGIN account .They will have to ask what are their experience ,then give the account in accordance with their experience . NOT open an account by saying nothing to worry this is the same what they had on paper ,on paper always paid, and their bank account would have to back up the purchase otherwise they would not buy anything .

Anyone who has doubts has to look in the website of action group ,as an 18 Year was crying for help ,as he bought over 15.000 of shares without paying one pound in his account ,and lost most of it and did not knew how is going to get out of it .

And the FCA had confirmed there had been complains in the past ,so something has to be done .

talexuser

Luz wrote: »

The main point of the article was to worn others not to get involved in the same situation .

Well thanks for that. The lesson for us all is don't gamble your life savings in an area where you have no understanding or expertise whatsoever because the consequences could well be that you lose your money. And when you do it's Barclay's fault for giving you the opportunity.

Luz

Just a reminder ,.

The broker , Barclays is an overall name ,but each department is responsible for their own actions ,.

So you cannot blame barclays name for one department mistakes or faults.

Otherwise they would close up shop by now .