Case Studies

Understanding how markets operate critical
for discount brokerage clients

The Problem

Case study:
What can be learned - the expert's advice Read More

From the Client's Perspective

A client of RBC Financial Group's online discount brokerage, RBC Action Direct (AD), complained that AD made an error and failed to correct it. The client had gone online to cancel a purchase order placed earlier that day. The view screen confirmed that the cancellation order had been placed. Assuming that meant the cancellation had been finalized, the client then went ahead and placed another order to purchase the same security at a different price, which was filled. Subsequently, the first purchase - for which he had ordered the cancellation -- was filled and posted to his account. When the client sold out of the double purchase, this created a loss for him. The client believed AD should offer compensation for his loss because its literature had misrepresented the services it provided and the risks of using them.

From RBC Action Direct's perspective

AD responded that no compensation was warranted. All the client's transactions were conducted strictly according to stock market standard operations, as stated in their account agreement which the client signed when he opened his account. Orders don't clear at the moment they are placed, but only when they have been filled and processed by the stock exchange. When the client placed the cancellation, the view screen did confirm the cancellation order, but warned that the cancellation itself would be made on a "best effort" basis, meaning it would depend on whether or not the original purchase had already cleared.

The Resolution

The Office of the Ombudsman reports

"In this case, the client and AD did not reach an agreement.

When our office investigated the facts, we found that the account agreement, which the client had signed, clearly spelled out that all transactions were subject to stock exchange practices and rules. We also noted that the computer screen gave warning that a cancellation order would be completed on a 'best effort' basis.

We concluded AD had acted fairly. It followed established practices, warned the client and lived up to its account agreements, which were provided to, and signed by, the client. There was no breach of contract, and no basis for compensation."

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