Charles Schwab's Bad Computer Costs Customer $17,500

Has someone’s temerity ever cost you? How much? How about $17,500? Jeffrey writes:

    “I trade options through Charles Schwab, specifically the NDX 100, a very volatile index.

    I attempted to sell a position to close it. I set a specific price which if available in the market place would be matched and executed.

    These orders are generally executed in seconds.

    Schwab’s computer kicked out my order where it was manually reviewed for over 2 minutes. In that period of time I lost $17,500.

    It seems their computer was confused because I had changed the price which I wanted. The computer apparently thought there was a double order. They have not admitted to this but i have gleaned it from talking to their staff.

    While Schwab has the right to review an order this rarely happens because most brokers allow clients to bypass the broker and go right to market. Schwab is not sophisticated enough to allow this to happen. In any case they still have a right to speedy execution and fair dealing.

    After following up by claim, a Schwab rep told me, “We could put the order in our back pocket and hold it for a week if we chose.”

Takeaway: When using Charles Schwab’s options trading systems, measure twice, sell once. — BEN POPKEN