Spreadbetting - IG complaint

[raysor]

I have to admit that I have such nightmare scenarios at the back of my mind when placing trades. I know that in 99.99% of cases it is just a question of being sensible but I guess anything can happen.

Makes me wonder whether I should be paying the additional spread to use guaranteed stops!

I think the problem is how spread betting and CFD has been "sold". I dread to think how many unsophisticated clients have wiped out a large part of their savings/ wealth. There must be many examples but an example close to me was a long CFD position in Alcoa. About 70,000 shares at around $40. Margin about $420,000. OK so the position was closed producing a loss of $52000. But lets say that position was still open now, which is possible, the loss would be $2,100,000
Other examples were shorting way out of the money index puts using VAL (value at risk) assessment (like all the Banks were doing) and hedging with futures if necessary. Well all this theory was blown out of the water by the events of the last few months.

 

[mr_put]

still some disbelief here in the facts of this case. i'll try again to convince you:

i had a full risk account, with 20k deposit limit. the deposit factor on ftse was 80 at the time this all took place, so £200pp long would require 16k of deposit limit, so i could put the bets on from a deposit limit perspective.

then i have to have funds in the account to cover the 16k in deposit limit. i had 1.8k in cash, 4.3k in running profits and ig gave me a 'waived deposit limit' (where they effectively advance you more credit under another name) of 12.5k. so i had 18.6 in 'funds' at the time, enough to put the 16k bet on.

this bet did go wrong. ig think they have the legal right to pursue this debt. as uktradergirl pointed out, betting debts are now apparently enforceable in law. i asked a solicitor who deals in litigation to look at it. they said that, according to the T&Cs and the documents i signed, ig have a legal claim, but that a barrister would be able to give me a better idea on this. the barrister's costs run into the thousands for a legal opinion, so i'm pushing that option to the back of the queue (unless i can find people in similar circumstances through forums like this to launch a class defence with).

ig have rejected my complaint on compliance grounds, so this will now go to the FOS. if they rule against me, i will have to look at the barrister option alone if necessary.

 

[arabianights]

Out of interest, do you feel any moral responsibility for the debt?

 

[Splitlink]

i got those same letters...after i had my loss. i thought my stop-loss was effectively my deposit / credit limit as per the letter they sent me when i opened the account. but they're now saying that they are not obliged to close out positions, just issue a margin call. on 92k on a 5k limit with less than 2k on deposit?!

Many years ago, before online trading, sometime in the early eighties, I was rung up by someone in IG who was, obviously, monitoring my account, about my position.

I was still within my margin and there was no problem but I mention this because I am incredulous that they allowed you to get into such a losing position without phoning you. My position was a fraction of yours.

No advice from me as, frankly, I'd be worried stiff. Yours is an amount that any business would pursue legally if they thought that it could win the case, so you must prepare yourself for that. If they don't think that they would win, they won't pursue it.

 

[SabreTT]

I have seen the sp500 gap in the middle of trading by about 50 points.
Also Ive seen companies ignore stop losses just because it was busy though they did go back later as I remember and close it ten minutes later at the stop loss price

This story doesnt seem likely because you make out you had a special arrangement or had talked to them if that was the case they would be liable for not also arranging limits at the same time

Here is a guy betting against the market just before a crash and it seems ig index were happy to officially limit his losses, I'd certainly want to do something similar.
A long time ago but seems unlikely they will now deliberately throw clients to the dogs in terms of risk management

1987 Stock Market Crash - How a Newbie Beat the Great Crash! - Part 1 :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

 

[Trader333]

The key here is that it was "controlled risk" which put a maximum on the possible loss.


Paul

 

[raysor]

ig gave me a 'waived deposit limit' (where they effectively advance you more credit under another name) of 12.5k. so i had 18.6 in 'funds' at the time, enough to put the 16k bet on.

Explain what a "waived deposit limit" is.

When you opened the account what did you put as your experience in trading was?

 

[TomTom]

Sorry to hear you misfortune M8.
For such a small account size it appears that your risk management stratogy was extreamly high.
One very IMPORTANT QUESTION TO YOU SIR ?

Yoy say you had a large postion on in the markets yes ? well what was you doing with yourself when you saw that this trade was not going in your favor ?

When ever I trade If its for £25 or £1000s per point I watch it very closely and have loss limiation stratogies in place to prevent any major losses to my finances.

It appears to me that you had no such polices in place, this cost your finances and resulted in a tremendouse loss.

Let be a lesson to all traders.......

 

[Xeno]

Small print

Small print? I don't think so. Can anyone on here who SBs regularly, or even sees adverts in the press, not have seen this loads of times

Remember that spread betting is a leveraged product and can result in losses that exceed your initial deposit. Spread betting may not be suitable for everyone, so please ensure that you fully understand the risks involved.

I don't see what could be clearer about losses exceeding deposit.

Btw, you should be able to get a barrister's opinion on this for under a grand, but, and I'm not legally qualified, I don't see much chance of you not being liable.

It's not exactly a precendent, but that guy who lost 2m at the bookies who took them to court because he'd asked them not to accept his bets also lost.

 

[Phil Mibbutz]

To all those who say this couldn't have happened, I used to have an IG account. After various 'SB incidents', I withdrew the money and stopped using it. About six months later I logged on and was amazed to find that a phantom bethad somehow been opened in the account about a week previously. Apparently, a dealer had accidentally put another punter's bet in the wrong place, and it didn't seem to matter that there was no margin to do so.

 

[dilesh23]

all these people crying if you want to hit them where it hurts, get together all the money you can (beg,steal and borrow) then start shorting them all day long :cheesy:

 

[mr_put]

i do feel a moral responsibility for some of the loss: the value of funds in my account, my credit limit and perhaps a bit more, but not 92k! it was my responsibility to monitor my positions, but ig, like all extenders of credit, have to ensure that i am in a position to cover any credit extended. i didn't ask for 92k of credit, they didn't vet me for it, and i didn't want it - but i got it anyway!

there's no way i should feel a moral responsibility for losses incurred as a result of ig not monitoring what credit they're advancing. ok, i should've been monitoring my positions, but we're not all full time day traders with constant real time access to prices, so i put a trade on thinking that, worse case scenario, while un-monitored, the trade could go against me, the funds in my account would be wiped out and i'll owe 5k + maybe a bit more, but not 85k more!

a waived deposit limit is apparently deposit that you don't need to have in your account to be cover a deposit requirement on a bet - seems sensible in a credit crunch!

re the case of the guy who lost 2m betting on the horses etc - he told the betting firm he had a betting problem and not to accept bets from him, they did anyway, he lost and then asked for his money back. he put the money down up front, so the bets were on cleared funds. the issue was with whether the betting firms had a moral responsibility to reject cash bets from him, a bit like saying MacDs should refuse to serve fat people.

 

[dilesh23]

when said person self excluded themselves, the process of stopping yourself from gambling in an establishment, the bookies are smart enough to make him sign a piece of paper which not only waives his right to gamble there, but also to take legal action if through his own scheming he manages to do so. p.s. i bet you all his loses, if he won he wouldn't let them have the money back if they demanded it.. claiming, he should't have been there in the first place

 

[Hoggums]

still some disbelief here in the facts of this case. i'll try again to convince you:

i had a full risk account, with 20k deposit limit. the deposit factor on ftse was 80 at the time this all took place, so £200pp long would require 16k of deposit limit, so i could put the bets on from a deposit limit perspective.

then i have to have funds in the account to cover the 16k in deposit limit. i had 1.8k in cash, 4.3k in running profits and ig gave me a 'waived deposit limit' (where they effectively advance you more credit under another name) of 12.5k. so i had 18.6 in 'funds' at the time, enough to put the 16k bet on.

this bet did go wrong. ig think they have the legal right to pursue this debt. as uktradergirl pointed out, betting debts are now apparently enforceable in law. i asked a solicitor who deals in litigation to look at it. they said that, according to the T&Cs and the documents i signed, ig have a legal claim, but that a barrister would be able to give me a better idea on this. the barrister's costs run into the thousands for a legal opinion, so i'm pushing that option to the back of the queue (unless i can find people in similar circumstances through forums like this to launch a class defence with).

ig have rejected my complaint on compliance grounds, so this will now go to the FOS. if they rule against me, i will have to look at the barrister option alone if necessary.

Doesn't matter what your deposit limits are. If you don't have the money in the account to cover the margin you can't open the position. AND YOU CAN'T USE UNREALISED PROFITS TO COVER THIS POSITION EITHER.

MADE UP STORY.

 

[arabianights]

Doesn't matter what your deposit limits are. If you don't have the money in the account to cover the margin you can't open the position. AND YOU CAN'T USE UNREALISED PROFITS TO COVER THIS POSITION EITHER.

MADE UP STORY.

Yeah, and direct debits are never made from the wrong account or for the incorrect amount, because the computer will stop it in all cases

Oh yeah, and airbuses? You can't crash them. There are systems in place.

Back in a bit, I'm just going to buy some beer. Good thing I'm not underage - if I was then I would be unable to buy any!

 

[cryten]

ya but why does he refuse to provide any screen shot proof? If your going to make such massive allegations in public you'd better have some proof..

 

[cryten]

Otherwise I'll tell you all about the time capital spreads stole 4.9 million from my account, fookers!

 

[UKtradergirl]

If he doesn't have screenshots and can't access the account now- he would have letters from IG i'm sure- asking for the money- he could post them? (with address blanked).

 

[arabianights]

What, so next time I say something I should have to prove it to you beyond reasonable doubt?

Forums would become unworkable without a bit of trust...

 

[UKtradergirl]

"a bit of trust" --- £92k's worth of trust?
No idea whether it is for real or not- not sure if it looks worse on him if he is telling the truth, or if he is lying to be honest! Either way it's not looking too bright.