'We lost everything gambling on shares'

Biggles

mark88man wrote: »

The fact Barclays then removed this feature at entry level

They haven't; that feature is still there. It's the 'higher-risk' elements (CFDs, spread betting and international trading) that have moved to a separate site.

I can't help wonder whether Barclays may have been somewhat culpable here (tho I use them myself quite happily), as I couldn't help wondering what other organisation would see 98 DDs bounce without taking matters in hand. But we've only got the media's take on this, so it's hard to tell.

Good grief, if these people had trouble managing three-day settlement, it's a good job they didn't discover CFDs or spread betting!

mark55man

Archi_Bald wrote: »

Alternatively, you could just use your brains and a bit of common sense. Works to perfection for the vast majority of people I have come across.

I disagree


What has common sense ever had to do with brains, or investing come to that


In terms of the general point around commercial sharp practice - people are pumping scams at you at an ever increasing rate. Scammy Texts, Scammy in app purchases, Scammy PPI. I have avoided all, I have helped my children avoid most of them, or at least been alert enough to nip some in the bud.


Raymond Chandler said the "sharp business dollar is the other face of organised crime" or some such.


Whilst these people are clearly responsible for their misfortune, there is an element of that great Lloyds (Insurance) executive who said - "if the Lord had not meant them to be shorn, he would not have made them sheep". I see plenty of that attitude in this account


Its all very well for us as investors with some experience to scoff, I still believe that Barclays are not without some discredit here. I mean lets face it they were plenty dishonest/reckless/bankrupt in their own corporate affairs

jimjames

mark88man wrote: »

In terms of the general point around commercial sharp practice - people are pumping scams at you at an ever increasing rate. Scammy Texts, Scammy in app purchases, Scammy PPI. I have avoided all, I have helped my children avoid most of them, or at least been alert enough to nip some in the bud.

I agree there are lots of scams and sharp practices but having never fallen for any of the ones above mainly because they were too obvious I'm still not sure that the responsibility lies other than with the buyer. Buying shares needs some common sense, buying shares with borrowed money needs even more but I'm sure there were plenty of warnings - 98 failed DDs is a start as that must have cost a fortune in bank charges too.

bowlhead99

mark88man wrote: »

Its all very well for us as investors with some experience to scoff, I still believe that Barclays are not without some discredit here. I mean lets face it they were plenty dishonest/reckless/bankrupt in their own corporate affairs

Well, you can jump to the conclusion that they are at fault with with this particular event on the basis that you didn't like what Bob Diamond did with BarCap or what the bank did with Libor or PPI or whatever.

However, much as we all like to bash bankers and fatcats, the investor was clearly at fault. I agree it is easier for us seasoned investors to say the investor is an idiot than a newbie investor is likely to self-recognise as an idiot. But if every time they try to take a direct debit payment when you owe them money it bounces, and you have to keep making manual payments or sell stuff to match the total amount of money you owe them for what they bought on your behalf, you would notice.

The investor did notice and said he got upset and irrational. To a broker, no traders are irrational because there is always someone on both sides of every trade. If they are a frequent lossmaker, that is also not uncommon. If they choose high risk short term positions, that is also not uncommon. If the bank ask for payment and can't take the direct debit but it comes in manually a bit later with apologies (perhaps you are not using your main current account for your direct debits) - should they cut them off for being unsuccessful investors? They only wanted a low cost execution only service and not advisory or asset management.

The broker could perhaps block the accounts but not without lengthy discussions with the client because if the account is within the prescribed limits they are still owed a duty of best execution if they request a trade.

As an irrational investor looking to make some high risk trades, the customer the investor would presumably say 'no, keep my account going please, I have the money here to fund it and would like to keep the account open'. Presumably when setting up the account in the first place he has told them his source of funds is a house sale and he will be investing tens of thousands - otherwise it might have flagged as a rogue account, money laundering risk etc. We can only speculate and we don't know what he said or they said.

The idea that he/she gamed the system to leverage 850% of the value of their holdings seems extreme but this is being told to us without the actual absolute sum of how many pounds of credit at a time they did this with. Presumably he was not sitting there with a £200k portfolio of which only £20k was his and the shares supporting the borrowing all went bust at once. Instead, he lost the large sum of money over a series of trades over a long period.

As a new investor that passes the credit rating, the Telegraph say you get £7.5k initial buying power. On day one at account opening that would be infinity percent leverage. With £100 down and an order placed for £7500 shares it would be 'only' 7400% leverage. If you had £800 in the account you could buy a portfolio of £7500 of shares and the leverage is 838% of your own cash. But you need to put the rest in ASAP and they can dip into your bank account or sell your holdings to get it if they need to, so from the bank's perspective this is not a crazy reckless facility in terms of their credit risk.

I have sidetracked a bit there. What I was originally saying was: while while we suspect that banks are more interested in their profits than the human stories behind someone losing money on their bad investment choices made without taking advice, and clearly the losses are only possible because the bank continued to provide the service to the customer, we should not simply accuse the bank of being at fault on the basis of some other corporate wrongdoing that we dislike them for, like an agressive bonus culture or PPI or Libor misstatement or whatever.

It shows they are not faultlessly ethical - but my getting a couple of speeding fines might also say that about me, without meaning I can be judged at fault for the death or robbery of someone I know just because I saw them on the night in question and have 'bad character'

If I ran up losses using/abusing the extended settlement terms with my account at TD Direct, and bit off more than I could chew with a large T+3 or T+5 or T+20 day investment that ultimately cost me a lot of money when the share underperformed, that is a lot more my fault than theirs for giving me the facility. If I lost 20 times in a row and still wanted the account, must they close it even though I have made good any overdue payments (by, unknown to them, selling my car or my great grandma's wedding ring)?

Is the answer different if I make 30 profitable trades and 50 costly ones instead of just losing 20 times for the same net loss? Is the answer to "who's at fault" different because TD Bank are not known very well in the UK despite having a market cap of $80bn, while Barclays have made some high profile corporate mistakes that have been in the papers the last few years?

A final thought:

When a number of banks took bailouts of one sort or another in the last few years, some commentators said that this was not the right thing to do, because despite the widespread systematic damage that could have been caused by letting them fail, it was the only way to make the surviving banks take risk seriously - and with the bailouts "now they know they are too big to fail and will never learn".

If the couple were to get any kind of compensation after having their case raised publically and discussed at CEO level, this would be the same thing - it would perhaps not send the right message about taking responsibility. Seeing horror stories about investors over-risking and making bad trades and having to bear the consequences themselves, should perhaps save others from the same fate. The message should be, take responsibility people.

Unfortunately, the consequence may be that people avoid investing altogether (even the 'relative safety' of a portfolio of OEICs and other collectives), or people avoid Barclays altogether (despite only being tangentially culpable), or that people forget the story and within a short time are out making the same mistakes again.

atush

mark88man wrote: »

I disagree


What has common sense ever had to do with brains, or investing come to that


In terms of the general point around commercial sharp practice - people are pumping scams at you at an ever increasing rate. Scammy Texts, Scammy in app purchases, Scammy PPI. I have avoided all, I have helped my children avoid most of them, or at least been alert enough to nip some in the bud.


Raymond Chandler said the "sharp business dollar is the other face of organised crime" or some such.


Whilst these people are clearly responsible for their misfortune, there is an element of that great Lloyds (Insurance) executive who said - "if the Lord had not meant them to be shorn, he would not have made them sheep". I see plenty of that attitude in this account


Its all very well for us as investors with some experience to scoff, I still believe that Barclays are not without some discredit here. I mean lets face it they were plenty dishonest/reckless/bankrupt in their own corporate affairs

I completely disagree.

Common sense says, if you lost your first 7.5-15K and had to borrow more and then lost 30-50K you should............

STOP, think, ask for advice from a professional etc (and there are MANY MANY more etc before borrowing and losing an extra 130K).

These people had money in the bank. At what point, watching themselves flush it down the swanny did they not realise they were being GREAT BIG GIANT NUMPTIES or whatever that passes for in their language of birth?

What did the newspapers do, advertise for the biggest idiots in the last 50 years? who would admit this, unless they were being paid enough for the article to now buy a cow for their new subsistance farm wherever?

Glen_Clark

atush wrote: »

At what point, watching themselves flush it down the swanny did they not realise they were being GREAT BIG GIANT NUMPTIES or whatever that passes for in their language of birth?

What did the newspapers do, advertise for the biggest idiots in the last 50 years? who would admit this, unless they were being paid enough for the article to now buy a cow for their new subsistance farm wherever?

who would admit this?
Probably caring people who don't want others to go through what they have been through.

sabretoothtigger

Would be interesting to see a list of the trades done and at what leverage.
How many were AIM and was cost averaging used at all because thats essential really

Mining shares have been awful since 2011 and london is one of the central areas for listing such companies so already just trading lse gives a negative bias though ft100 has gone up, obviously they could have easily strayed too far into commodities.

Had they done tech in the late nineties, they'd be millionaires by now - so long as they sold higher, used stoplosses to cap gains, etc. Just being in the right place, counts for alot

mark55man

atush wrote: »

I completely disagree.

Common sense says, if you lost your first 7.5-15K and had to borrow more and then lost 30-50K you should............

STOP, think, ask for advice from a professional etc (and there are MANY MANY more etc before borrowing and losing an extra 130K).

These people had money in the bank. At what point, watching themselves flush it down the swanny did they not realise they were being GREAT BIG GIANT NUMPTIES or whatever that passes for in their language of birth?

What did the newspapers do, advertise for the biggest idiots in the last 50 years? who would admit this, unless they were being paid enough for the article to now buy a cow for their new subsistance farm wherever?

I don't think we are too far apart atush.


I agree they were fools, but I disagree that Barclays played them with a straight bat


Humorously, your quote could equally be applied to Lehman / ... and the only difference was the moral hazard that Joe Public wasn't going to get baled out by the public.


PPI "victims" are getting compensated - I see this as a worse abuse

Mirno

If the banks had all the limits in place, then the opposite story would have been written:

Fat cat vs psychic Gerbil.
Tony Mungbean, Barking was denied 180k in profits by Barclay's. Tony's pet Gerbil, Gerry has always had his cage lined with the Financial Times. Tony noticed Gerry consistently defecated on stocks that rose the next day. When Tony tried to open a share dealing account with Barclay's bank, he was denied the trading opportunities that "professionals" use. Instead he could only trade a maximum of £2.50, and so lost out on opportunities.

When asked about whether psychic rodents should be given access to the same facilities as other traders the Barclay's spoke person said "What? Are you crazy?".

Comments from our reader:
R. Sole - Soggy Bottom, UK 10 minutes ago:
Typical fat cat banksters wanting to keep all the profits to themselves.

Mindless Parrot - Essex, UK 14 minutes ago:
I once tried to buy every share in the whole world and those greedy shysters wouldn't let me. Bloody thieves the lot of them.

There's this thing called personal responsibility, what more do banks need to do? Have a member of staff at every branch making sure customers don't run with scissors?

Mirno

mark55man

I do agree with you, it is about personal responsibility, YET


is there no such thing as corporate responsibility - for me it is the constant barrage of "not our problem" and "how much can we get" from large corporates that is a distortion of the business ethics and CSR they proclaim


Jeff Bezos - head of Amazon, so not a bad capitalist, is a prime example of a company that looks to balance profit and customer priority (he also gets a lot of stick for not being more aggressive with pricing - yet he views excessive profit as not customer friendly)