Being recharged 11,000% for 1900 mischarged transactions

I would like to hear why you think I should win the case. I will tell you how I plan to win my claim at the end of this post.

One day I called my stock broker to accept its offer for lower commission fees. One of the broker_s employees specifies how the new fees would work, and I tell him okay. A few minutes after our phone conversation, I start making trades and I only get charged 1¢ per share. I was supposed to get charged that much on most trades, but I was also supposed to get charged $9.95 on some trades. Considering I had so little money to trade with, it seemed to me like a possibility that the broker would waive the $9.95 charges. After all, the broker was well aware I was in the process of moving to another broker due to unaffordable commission fees.

I did not accept that the broker wanted to charge me only 1¢ per share until I received confirmation that the broker was aware of what it was charging. I received that confirmation 3 days later, when an account administrator contacted me to request a signed form for trade confirmation. I had also made a few more contacts with the broker later, although not concerning my commission fees.

For 44 days, I was getting charged only per-share commission fees. I made 1900 trades, with the trades on average involving 3 shares per trade, and $90. I had only $3000 worth of liquid stock, and I was trading with $1000 worth of those. Also, my account with the broker is a cash account.

Fifty days later, the broker recharges me $6,250, which is the amount it failed to charge me according to the oral agreement. This charge is 110 times more than what I was being charged: $1.10 charge per share vs. the $0.01 charge per share I got. Basically, the broker tricked me into giving it all my money and then some. Now I am taking the broker to Small Claims Court to get the $6,250 returned.

I will give you my arguments, and maybe you can comment on them. Here they are:
1) Although we made an oral contract, the subsequent receipts override it.
2) There was no indication that charges would be deferred.
3) I am being charged twice for the same transactions.
4) The amounts of the recharges are unjustly high at 11,000%.
5) I did not accept an agreement to receive a $6,250 loan from the broker.
6) A cash account is intended to prevent this very thing from happening in the first place.

Where is the documentation that the broker intended to give you a 1 cent/share commission rate? If it was their mistake, they do not have to honor it as a contract.

NewWill said:

I would like to hear why you think I should win the case. I will tell you how I plan to win my claim at the end of this post.

One day I called my stock broker to accept its offer for lower commission fees. One of the broker_s employees specifies how the new fees would work, and I tell him okay. A few minutes after our phone conversation, I start making trades and I only get charged 1¢ per share. I was supposed to get charged that much on most trades, but I was also supposed to get charged $9.95 on some trades. Considering I had so little money to trade with, it seemed to me like a possibility that the broker would waive the $9.95 charges. After all, the broker was well aware I was in the process of moving to another broker due to unaffordable commission fees.

I did not accept that the broker wanted to charge me only 1¢ per share until I received confirmation that the broker was aware of what it was charging. I received that confirmation 3 days later, when an account administrator contacted me to request a signed form for trade confirmation. I had also made a few more contacts with the broker later, although not concerning my commission fees.

For 44 days, I was getting charged only per-share commission fees. I made 1900 trades, with the trades on average involving 3 shares per trade, and $90. I had only $3000 worth of liquid stock, and I was trading with $1000 worth of those. Also, my account with the broker is a cash account.

Fifty days later, the broker recharges me $6,250, which is the amount it failed to charge me according to the oral agreement. This charge is 110 times more than what I was being charged: $1.10 charge per share vs. the $0.01 charge per share I got. Basically, the broker tricked me into giving it all my money and then some. Now I am taking the broker to Small Claims Court to get the $6,250 returned.

I will give you my arguments, and maybe you can comment on them. Here they are:
1) Although we made an oral contract, the subsequent receipts override it.
2) There was no indication that charges would be deferred.
3) I am being charged twice for the same transactions.
4) The amounts of the recharges are unjustly high at 11,000%.
5) I did not accept an agreement to receive a $6,250 loan from the broker.
6) A cash account is intended to prevent this very thing from happening in the first place.

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And people wonder why Ldij's most frequent answer on these forums is: "Huh?"

shortbus said:

Where is the documentation that the broker intended to give you a 1 cent/share commission rate? If it was their mistake, they do not have to honor it as a contract.

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Well I am supposing the statements showing the 1¢ per share commission rates are enough.

Also note, the trades were setup to be only feasible with per-share commission fees. Any higher commission fees would be inequitable.

NewWill said:

Well I am supposing the statements showing the 1¢ per share commission rates are enough.

Also note, the trades were setup to be only feasible with per-share commission fees. Any higher commission fees would be inequitable.

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The statements are not proof of the broker's intent to give you a discounted rate. If anything, they are evidence of a mistake.

It was a mistake that was caused by their negligence. It is highly doubtful that they were not aware of what they were giving me. Furthermore, I don't believe Indian giving (excuse the derogatory term) is a law.

It is the company's mistake (be it intentional or unintentional,) and it has no right to reclaim uncharged amounts.

I also disagree with you: the statements are written agreements between me and the company, and override any previous verbal agreement. It cannot simply discard those agreements defined by the statements after the agreements are honored and closed. Is it right for you to go to the store, buy something on sale, get a receipt for the thing, and then have the store demand the full price?

I believe the term for what you would want to find to make your statement true is "integration" clause. Just because there is a writing does not mean prior or contemporaneous evidence (like a verbal agreement) can't be used to prove up the meaning of your contract. (If, in fact, the statement is a contract at all.)

Say I make a verbal agreement (contract) with you for $1,000 to buy a widget. You go to the warehouse and they make a mistake and charge you only $10--and write out the receipt for that amount. Do you think you get the deal?

Now, if the receipt had something along the lines of: "This is the complete agreement between the parties. Any prior or contemporaneous agreements must be in writing to be valid." Then you *may* have a deal. This is called an integration clause in a contract. Do you have such a clause in your writing?

That does not mean you owe the money. As Mary Explodes wrote, "Huh?" Remember you are living your facts and know the background and are trying to tell us what you think is important. We don't have all the context and I'd bet very few of the readers of your post actually know what is going on exactly, including me.

Thanks for that tranquility.

Here is a bulletin of some of the facts:
-I made so many transactions, 1900 transactions, because I was getting charged only 1¢ per share
-I was charged only 1¢ per share for 44 days
-I had about 10 contacts with the broker during those 44 days
-The broker made no reservation of charges during those 44 days, and has never deferred charges before
-I was charged anew $6,250, 520% of the money being charged on, and 11,000% of the initial charges
-The broker blames a system error, yet refuses to acknowledge any responsibility for the error
-The trades were made using software, and had an average value of $90 each
-The broker should not allow you to borrow money with a cash account
-It is not unheard of to get 0.1¢ per share commission fees, and the broker I was going to move to, before I got lured by 1¢ per share charges, would have only charged me $0.70 per trade

A contract is an offer with definate and certain terms, relayed to an offeree, who accepts the offer with a benefit and a detriment of each.

What is your contract?

Promissory estoppel is where a person reasonably relies on the statement of another and suffers damages because of the reliance.

What are your damages?

All the things you placed may be relevant between two people selling goods of a kind in order to find a course and dealing, but I don't think the sale of stock would apply.

I don't think you have a contract to get the .01 trade. You may have a detrimental reliance, but you haven't provided the statement you relied on. The "statement" you refer to is after your actions. What did the broker say? What does your written contract say?

I think promissory estoppel, as you define it, can be reasonably demonstrated. First, there is the software that states the 1¢ per share commission fees, then there are two websites, and lastly there are my monthly hard copy statements. Also, the length of time, 44 days, is relevant too.

As for damages, there is a lot of financial damage. I was beginning to be very careful with my commission fee spending before this happened, which even the account manager I talked to when I lowered my commission fees commented on. Also, charges were laid on money that I would not have had. I think all the amount over the $1,200 I was trading with can be specified as damages.

As for your doubt about the applicability of the transactions to promissory estoppel, I believe the software I was using would be considered an intangible good. I will have to look into that further.

Don't waste your time on the "good" portion, the course of dealing to try to prove up a contract will not apply to you and your situtation.

The hard part is the *reasonable* reliance. You had to have signed a contract to make trades in the first place. I'd bet part of that contract gives the acceptable ways the contract can be changed. Sometimes they do say that the terms and conditions are posted on a webpage. If so, and the change in the contract was posted as written, then good for you. If not, you may not be able to reasonably rely on the website.

Knock yourself out, but your inability or refusal to give the statement you are relying on makes me think you are not going to win in arbitration. Your statements are not going to help much. Your websites are not going to help much. The software may, but I'm not sure what you mean by it telling you the price. If it is merely giving you an estimate or calculation of the cost, I don't think it will help you.

Estoppel is usually used as a substitute for consideration in a contract. It is not used to try to find a promise. I don't think you've found a promise as yet. Promissory Estoppel may apply, I just don't see the promise yet. You have not described it. Are they tricking you? Maybe, but you aren't really saying why. Are they just stupid? Again, you aren't saying why. Listing things that would make you believe something may help on the resonableness of your belief, but nothing you have described seems to have promised anything.

I'm done with the thread, with this suggestion. Find the promise, the smoking gun. Make sure the way it was promised is not in violation of the written contract you have. Once you have those, then start listing the reasons why you can reasonably rely on the promise. But until then you've got nothing.

Thanks for all your help tranquility. I will seriously consider your suggestions, and you'll find out the result of this case should it go to trial.

What happened to me is simply unacceptable, and I_m really just hoping to find a law that would protect me from such deceptive business practice, irregardless of what I signed with them. I am hoping I can avoid decrypting their legal documents, which I_m sure were designed to cause maximum confusion.

I do believe they tricked me, but I don't think I can go to the judge "they tricked me, and now I want my money back." I really don't have any proof of them tricking me, other than the layout of events and the statements. Therefore, my concentration is finding legal barriers specifying why they shouldn't be able to do what they did.

Frankly, this is what I think happened (mostly supported by emails and other documents):
For a few days, I exchange emails with them, harshly insulting them for their high commission fees. They offer me some trades with per share commission fees, because they claim they are not "deaf and indifferent to the needs and wants of its clients." I reject their offer, intending to transfer my account with them to another broker. I send in my application to open an account with other broker, but the other broker tells me there is some missing information. I get eager to begin trading with lower commission fees.

I call my existing broker to accept its offer of lower commission fees, while my application with the other broker goes through. The account manager questions why I should be helped when my intention is to transfer to another broker. Like an addict, I tell him I'm getting anxious, and it will be just for a couple days until I can move my account. He looks up and down at my account, doesn't seem impressed, and he says "here is what I'm going to do: within a particular day, you will be charged $9.95 for the first buy or sell in a stock, and 1¢ per share for all other trades in the same stock."

I say "Okay, I'll take it until I can move to a broker that can accommodate me better." He goes in the back, mumbles something with somebody, and comes back and tells me I'm good to go. What happened I believe is that this account manager had it in his head to take the maximum advantage of me, until I transferred to the other broker. He figures to make me think I will be getting charged only 1¢ per share, so I go crazy with the trading, only to have me charged the "actual" amount later. He was probably thinking that will show this ahole what happens when you mess with us.

Soon after the call, I make a trade and only get charged 1¢ per share, no $9.95 charges. I figure the account manager must know what he's doing, because I just talked to him a couple of minutes ago. I'm also thinking they might charge me the uncharged amounts at the end of the day. So, that day I'm careful not to make so many trades. The next day, my account didn't reflect any deferred charges.

At this point, I didn't care what they were charging me, because their commission fees made me broke in the first place and I was intent on leaving them. A week goes by, and the 1¢ per share charges now start looking "too good to be true" to give up. I figure it's been a week or so and they must want me to have the per-share commission fees: I've been contacted once already from an account administrator, it has been more than a week, I've been an exceptionally good customer, and they are well aware I had very little money to trade with. Plus, I thought it was my right by law to have the 1¢ per share charges, since they were giving them to me.

Now I'm thinking the account manager is a gracious and generous guy. I cancel my plans to transfer to another broker, and continue using my existing broker. A months or so later, a sheepish sounding account manager informs me of the "embarrassing" news that I was being charged the wrong amount. I didn't care as I wasn't making money even with the 1¢ per share commission fees, but I didn_t think they had the right, guts, or gull to charge me anew for the 1900 trades I made. Of course, my sentiment toward that account manager flipped when they charge me $6,250 two weeks later.

So that_s what happened according to facts and my perception.