EFT fraud? Specialist question.

noh

debaura12 said:

dunstonh said:

debaura12 said:

kristina001 said:

The EFTA allows consumers to challenge errors and have them corrected within a 45-day period with limited financial penalties. When errors occur, EFTA outlines requirements for banking institutions and consumers to follow.

OK thanks for that. But surely Hargreaves Lansdown should offer some kind of associated warning?

You probably find they do.  However, it will likely be in the list of other warnings they have to issue on all the other things and becomes a long list of things to read.

I would think that there must be a bold warning if placing a stop loss could result in a sale of 22% of under the market value, don't you?
I find it unreasonable that such an order could be placed and deemed as in any way correct practice to exercise at a cost to the client of 22% of market value. 

HL do give a risk warning for stop loss and limit orders.

https://www.hl.co.uk/shares/share-dealing/limits#risks

On-the-coast

As far as I can see, setting a stop loss on a highly leveraged volatile ETF pretty guarantees you’re going to lose money…sorry. 

Thrugelmir

jamei305 said:

That ETF is classed as a sophisticated investment meaning that HL shouldn't have let the OP trade in it without first completing their Complex Products Questionnaire.

 I'm sure many people complete these forms when they aren't. Comes back to haunt them though. 

dunstonh

noh said:

Malthusian said:

3X leveraged? Almost certainly nothing to see here. Although if the OP makes a formal complaint to HL, it won't cost them anything and HL will almost certainly reply to set out full details of when the stop loss triggered and why the market price was where it was at that particular point. If I am wrong and HL made a mistake they will compensate the OP.

Nobody investing in an S&P500 3x Daily Leveraged ETF needs risk warnings. You don't stumble across a share like that while looking for Vanguard LifeStrategy.

The risk warning is of course present in the KID which presumably the OP read.

https://www.wisdomtree.eu/-/media/eu-media-files/key-documents/kids/kid---wisdomtree-sp-500-3x-daily-leveraged---3usl---en.pdf

And when buying an ETF, you confirm in the declaration at the point of purchase that you have read the KIID.

Malthusian

Although the KID contains this gem:

Scenarios: One (1) day (Recommended holding period)

Unfavorable Scenario - What you might get back after costs - $10,158
Moderate Scenario - What you might get back after costs - $10,138
Favourable Scenario - What you might get back after costs - $9,685

Conclusion: Nobody who understands how leveraged ETFs work would bother reading the KIID, which is required by European regulations to print complete gibberish.

debaura12

debaura12 said:

kristina001 said:

The EFTA allows consumers to challenge errors and have them corrected within a 45-day period with limited financial penalties. When errors occur, EFTA outlines requirements for banking institutions and consumers to follow.

OK thanks for that. But surely Hargreaves Lansdown should offer some kind of associated warning?

What is the EFTA please? 

GeoffTF

Malthusian said:

Although the KID contains this gem:

Scenarios: One (1) day (Recommended holding period)

Unfavorable Scenario - What you might get back after costs - $10,158
Moderate Scenario - What you might get back after costs - $10,138
Favourable Scenario - What you might get back after costs - $9,685

Conclusion: Nobody who understands how leveraged ETFs work would bother reading the KIID, which is required by European regulations to print complete gibberish.

I think you will find that is the UK interpretation of the EU directive.

masonic

If you'd gone here on the day the trade executed, then you'd be able to verify that this was a genuine market trade at that price. It's very likely to have been correct. Leveraged ETFs like that one are not well suited to limit orders. 

Malthusian

GeoffTF said:

Malthusian said:

Although the KID contains this gem:

Scenarios: One (1) day (Recommended holding period)

Unfavorable Scenario - What you might get back after costs - $10,158
Moderate Scenario - What you might get back after costs - $10,138
Favourable Scenario - What you might get back after costs - $9,685

Conclusion: Nobody who understands how leveraged ETFs work would bother reading the KIID, which is required by European regulations to print complete gibberish.

I think you will find that is the UK interpretation of the EU directive.

Potato pomme de terre. PRIIPs and KIDs are a creation of MIFID, aka "the world's worst regulation", not (for all its faults) the FCA.

They would not exist if it wasn't for ludicrous notions of creating a single market for financial products across the EU. Creating a single market for financial products across multiple jurisdictions with wildly differing tax rules is of course impossible, but creating silly rules to standardise disclosure documents is not. The result is the badly spelled gibberish I quoted above. ("Unfavorable" lol)

Anyway, that wasn't meant to be a Faragist rant about bendy bananas. It was illustration of what happens when you try to force a very complicated and arcane investment product to produce a document explaining how it works to retail investors in Janet and John terms, using a template designed for the French equivalent of Vanguard LifeStrategy.

What it should say is "See daily leveraged ETF. John buys ETF. John loses his shirt. Run, John, run."

debaura12

Well I would like to see a better informed KIDD scenario - Perhaps you will entertain 

debaura buys ETF at 129, debaura places stop loss at 121, trade executes same day at 93 (despite share price never going under 129),  debaura looses £10,000.  Don’t be a putz like debaura and invest in an ETF unless you have a Phd in finance.