Negative Account Balance: Legal Side | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Negative account balance recovery process 7 replies

Brokers chasing you for negative account balance 863 replies

Negative account balance (London Capital Group) 14 replies

any legal proceedings yet against negative balance accountees? 4 replies

Negative balance on real account 12 replies

Negative Account Balance: Legal Side

  • #1
  • First Post: Jun 22, 2016 10:42pm Jun 22, 2016 10:42pm
Hello All,

I've been trading with one well known/reputable AU broker for some time. (along with many others)

5-6 months ago, while I was trading ~$22k with full margin of 1:400;
due to huge liquidity/slippage + greed my account liquidated to ~-$4k in seconds (stop out hit / $21k of it was profit)

* Not CHF / there was no faul play on broker side / margin call - %90 and stop out - %20 *

- The broker has no 'Negative Account Balance Protection'
- I am not an AU citizen.
- I do not have any bank accounts in AU.
- I don't plan to travel to AU anytime soon.
- The broker did not contact me after the account went negative.

____

Questions:
- Can they force me to pay $4k?
- Why aren't they after the debt I owe them?
- Can I be sued in my country? (they don't have an office here)
- Since they have no office in my residence country, how will they handle this issue?


Cheers.
  • #2
  • Jun 23, 2016 12:21am Jun 23, 2016 12:21am
The broker was supposed to get you out at the stopout level of 20% which would have left you 4.4k in your pocket.
Instead they took your money. Why don't you sue them?
Yeah?! Well.. you know, that's just like.. your opinion man! - Big Lebowski
  • #3
  • Jun 23, 2016 12:45am Jun 23, 2016 12:45am
This has always interested me , I have seen similar scenarios just even in demo accounts not full filling the margin security of 20% and sending an account into negative. As far as im concerned the negative side is their problem . Kinda like buying a car from a dealer and drive down road the brakes fail and a wheel falls off and you write the car off. They sold you a dud. No accountability and the fuckers will always get away with it. The whole idea IS MARGIN in this case and there is a safety stop of the entire account if your loaded. They will always spout on about slippage to render an excuse. To bad they are a service and are not delivering . Funnily enough it is evident they can do something because look at the margin tightening from their side over this brexit crap. Also how many times do you see your platform drop from the feed but you still have internet.
  • #4
  • Jun 23, 2016 12:49am Jun 23, 2016 12:49am
- The broker has no 'Negative Account Balance Protection' : What is "negative account balance protection" in ur terms? It is just strange enough for me.

Basic Example:

To calculate the margin requirement required to open a trade, please use the following formula:
(Market Quote * Volume) / Leverage = $Margin required eg.

You want to open 0.1 (10,000 base currency) lots of EUR/USD at the current market quote of 1.4177 and with a leverage level of 1:200. (1.4177 * 10,000) / 200 = $70.89. As you can see from this example, you need at least $70.89 free margin at 1:200 leverage to open the trade. If you choose 1:1 leverage (or no leverage) you would need $14,177 free margin instead of $70.89 just to open this trade!

Your free margin can become a negative figure. Your trades will stay open until your available EQUITY level (also indicated in the MT4 terminal) falls to 20% or less of the required margin to open the trades. If you see the previous example in this FAQ, the trade opened with a margin requirement of $70.89 would not be subject to a margin call unless the account equity falls to $14.18 or less.

And Your Trade is Over at Stop Out Level $14.18. The amount to be left out on your Account could be lower than $14.
fooled by randomness in art
Meditation All Time Return: 8.9%
  • #5
  • Jun 23, 2016 1:19am Jun 23, 2016 1:19am
they were trading against you. they took your 22k, so the other fictitious 4k actually don't exist. they are not interested in them, cause you made them enough money already.
Why dont you put the name of the broker, so we can know.. they are not going to sue or beat you for doing that surely.
P.S. even if the money were real in that particular case, 4k is not a big sum to chase over borders. There legal expenses can be higher than the money that they take from you. I dont think that any broker will chase for negative under 10k or even a lot more, cause it is not worth it. But as I said, those negative money are made up most probably. Your broker haven't lost anything really.
  • #6
  • Jun 23, 2016 1:57am Jun 23, 2016 1:57am
Do nothing, re read your agreement you signed. That will give you all yours answers.
All posts are my personal opinion
  • #7
  • Jun 23, 2016 2:06am Jun 23, 2016 2:06am
full margin of 1:400;

Thank you for helping the CEO of this bucket shop get his kids through college and buy a new Ferrari.

Did you not get that thank you letter from them like they do for all their "preferred customers" ?
  • #8
  • Jun 23, 2016 2:53am Jun 23, 2016 2:53am
Quoting Mingary
full margin of 1:400; Thank you for helping the CEO of this bucket shop get his kids through college and buy a new Ferrari. Did you not get that thank you letter from them like they do for all their "preferred customers" ?
nice
about original questions - yes they can sue you (only in ur country). They probably will not bother. They might sell your debt to a solicitor or agency for a percentage.... Maybe it's worth asking them. Or maybe they forgot. Plenty of fish in the forex sea. GL.
Beware of robber banks (RB), bad advisors.
  • #9
  • Edited 3:52am Jun 23, 2016 3:40am | Edited 3:52am
Thank you for all the answers:
I thought alike with the most.

The broker is Pepperstone.
  • #10
  • Jun 23, 2016 3:46am Jun 23, 2016 3:46am
Update:

I've checked my pepperstone account and to my surprise the negative balance is not there.
  • #11
  • Jun 23, 2016 3:48am Jun 23, 2016 3:48am
Found this in my mailbox.
I don't think I will trade with this broker again.
LOL

__________

Hi x,

As a valued Pepperstone client we would love to see you start trading again. We've recently made significant technology upgrades and tightened spreads on our major FX pairs, now from 0.0 pips, making Pepperstone one of the lowest cost brokers in the industry.

To help get you started, Pepperstone has completely cleared your negative balance of USD ~4k

As a further added bonus, if you deposit at least $200 by the 31st of March 2016, you will also receive 20 Free Forex Trades*.

To take up this limited time offer, simply reply to this email after you have funded your account. If you have any questions about funding your account, please let us know.

Kind regards,
Mickey
Account Manager
  • #12
  • Jun 23, 2016 7:43am Jun 23, 2016 7:43am
Quoting openyoureyes
Found this in my mailbox. I don't think I will trade with this broker again. LOL __________ Hi x, As a valued Pepperstone client we would love to see you start trading again. We've recently made significant technology upgrades and tightened spreads on our major FX pairs, now from 0.0 pips, making Pepperstone one of the lowest cost brokers in the industry. To help get you started, Pepperstone has completely cleared your negative balance of USD ~4k As a further added bonus, if you deposit at least $200 by the 31st of March 2016, you will also receive...
Pepperstone ... not a surprise then.
  • #13
  • Edited 8:59am Jun 23, 2016 8:14am | Edited 8:59am
Geeez what kind of slippage was that ? 40-50 pips !?
  • #14
  • Jun 23, 2016 7:50pm Jun 23, 2016 7:50pm
Well, I think this is entirely rubbish report. Too much controversy.
fooled by randomness in art
Meditation All Time Return: 8.9%
  • #15
  • Jun 24, 2016 1:10am Jun 24, 2016 1:10am
Just forget what happen, not pay anything, they cannot do anything and you also cannot do anything to ask any refund, just forget
  • #16
  • Edited Oct 15, 2016 4:16am Oct 14, 2016 5:49pm | Edited Oct 15, 2016 4:16am
OK guys, here I have totallly different story about Pepperstone. I live in the UK but not British. As you may know they promote negative balance protection on their website but they don't gaurantee it to work in extreme conditions (I don't undrestand what is the point of offering it as all of us need this to work exactly at EXTREME conditions lol)

Unfortunately due to recent pound flash crash my balance went on negative balance of 5.2K + losing all deposit+profit of 12.3K and now Pepperstone is chasing me to repay %60 of this balance to set it to zero, they keep telling that trader is responsible to pay their debts when such extreme conditions happen based on their T&C that never came up once I opened my live account.

Here is what they emailed me:

Dear x

Unfortunately negative balances are not guaranteed and repaid by Pepperstone as per sections 14.6 and 14.6.1 of the PDS. Pepperstone does employ an automated stop out system at 20% margin however if there are gaps in pricing like then your margin percentage can drop from 20% to below 0% within milliseconds.

Pepperstone offering to compensate 40% of the negative balance is an extremely generous offer and one that we hope you will take up to avoid this issue dragging further. We are also happy to set up a payment plan should you need more time than 2016 to fund the total 3118.85 GBP required to being the balance back to 0.

The negative balance compensation offer is to the end of 2016 which we believe is a long period for your circumstances to change and to make contributions to the negative balance left in the account.

Please let us know if you are accepting or rejecting the offer / the payment plan option.

Regards,
Pepperstone Admin



Is there anyone here have ever had similar experience with pepperstone and what is your recommendation?
  • #17
  • Oct 14, 2016 6:27pm Oct 14, 2016 6:27pm
He is right

Quoting Yuri57
The broker was supposed to get you out at the stopout level of 20% which would have left you 4.4k in your pocket. Instead they took your money. Why don't you sue them?
WaBaS Where are Buyers and Sellers
  • #18
  • Oct 14, 2016 6:31pm Oct 14, 2016 6:31pm
Where do you live and what nationality?
Quoting fmaher
OK guys, here I have totallly different story about Pepperstone. As you may know they promote negative balance protection on their website but they don't gaurantee it to work in extreme conditions (I don't undrestand what is the point of offering it as all of us need this to work exactly at EXTREME conditions lol) Unfortuntely due to recent pound flash crash my balance went on negative balance of 5.2K + losing all deposit+profit of 12.3K and now Pepperstone is chasing...
WaBaS Where are Buyers and Sellers
  • #19
  • Oct 14, 2016 6:34pm Oct 14, 2016 6:34pm
Quoting openyoureyes
Hello All, I've been trading with one well known/reputable AU broker for some time. (along with many others) 5-6 months ago, while I was trading ~$22k with full margin of 1:400; due to huge liquidity/slippage + greed my account liquidated to ~-$4k in seconds (stop out hit / $21k of it was profit) * Not CHF / there was no faul play on broker side / margin call - %90 and stop out - %20 * - The broker has no 'Negative Account Balance Protection' - I am not an AU citizen. - I do not have any bank accounts in AU. - I don't plan to travel to AU anytime...
Hi mate, PM sent.
  • #20
  • Oct 14, 2016 11:25pm Oct 14, 2016 11:25pm
In a few seconds you made them thousands. Of course they will wipe the 4k and invite you to come back and loose thousands more.
0 traders viewing now