http://business.theage.com.au/commsec-customers-stymied-by-net-jam/20080124-1nzh.html
CommSec is one of the few winners from the market panic
* Mark Hawthorne
* January 25, 2008
AMID Tuesday's market meltdown, as blue-chip shares tumbled and CommSec account holders tried in vain to get online, one user called Myst posted on CommSec's user forum: "Has anyone tried suing them? Wonder if they're successful … "
The thought would have crossed through more than a few minds this week, as CommSec account holders watched helplessly as their portfolios dwindled in value while they were unable to sell via the log-jammed website.
Sadly for Myst, CommSec has well and truly covered its legal bases ”” just take a quick look at some of the terms and conditions CommSec account holders have agreed to.
It kicks off in 16(a)(iii) of the contract: "The accuracy, timeliness or completeness of the market information is not guaranteed by us or any third party."
Section 18 states: "We are not obliged to accept any application or instruction to trade, nor are we obliged to provide you with reasons for refusing your application or instruction to trade."
Just to reaffirm the point, section 23(a) states: "You acknowledge that we will make all reasonable attempts to enter your instructions to buy or sell securities as quickly as possible. However, should delays be experienced (i) in connection with the number participants or persons attempting to participate in the market at a point in time;
(ii) due to verification or authorisation processes; or (iii) due to delays relating to call waiting time, we will not be liable for any claims for lost opportunity."
And, just to well and truly cover CommSec's backside, there is section 27: "You will indemnify us against any actions, claims, demands, proceedings, costs, damages, expenses, liabilities and losses (including legal costs on a client and solicitor basis) paid, suffered or incurred by us directly or indirectly as a result of undertaking your instructions in respect of any dealings in securities."
So, in English, CommSec reckons it is under no legal obligation to provide accurate information to its 1.4 million Australian account holders, to actually facilitate a share trade for them, to provide any reason for not performing a trade and, should the system go belly-up during a run on the market, account holders give up all rights to sue.
All that for the bargain-basement price of $29.95 a trade ”” and not even a free steak knife in sight.
While CommSec is under no legal obligation to provide a reliable service ”” a point that could still be tested in court ”” it has at least admitted to a moral obligation to provide a stable network.
CommSec has offered some of its bigger clients refunds on their brokerage fees after many blew small fortunes during Tuesday morning's system meltdown.
One trader, who lost several hundred thousand dollars when the CommSec computer system refused to accept his pre-open sell-down of the company MEA, says he was offered a refund of his broking fees for the day.
"This morning got a call from CommSec, the most arrogant, least customer-oriented (but also the cheapest) broker I have ever dealt with," he wrote to Full Disclosure.
"Not only an apology for the debacle, but refunding the brokerage on the four trades I managed to get done, without being asked. Absolutely unprecedented ”” normally have to drag them kicking and screaming to any sort of mea culpa. Who says there is no such thing as bad publicity?"
We wonder if any mum and dad traders who lost out will be offered the same deal?
After all, CommSec does a daily average of 50,000 trades. In the first 90 minutes on Tuesday, it did 40,000 trades. At the standard price of $29.95 each, that's $1.2 million in broking fees. That ought to pay the wages of a few more telephone staff. Over the past three days of market panic, CommSec has earned in excess of $6 million from brokerage fees on securities alone ”” making it one of the big winners from the panic in the market.