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Inaccurate Gain/Loss Accounting
Inaccurate Transaction Dates Indicate Unreported Positions
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​​In 2023, a FINRA Disciplinary Action issued against Barclay's Capital affirmed that the type of error I'd identified in my Schwab brokerage statements was indicative of transactions missing from the record.​​ First we'll review the recordkeeping issue, then we'll show how it matches the the FINRA A.W.C. (Letter of Acceptance, Waiver, and Consent)​​​
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Charles Fraud highly encourages you to inspect your own brokerage statements to check whether the same types of errors exist. If you find something, let me know.
Referenced below are excerpts from my Schwab Brokerage Statement. The complete brokerage statement for March 2018 can be accessed via the link below or by clicking on any of the excerpts.
At issue here is the Short Sale of 50 Options Contracts that, according to the "Realized Gain or (Loss)" (shown in the excerpt below) was a position that was both Opened and Closed on March 23. The problem, as we'll see below, is that the "Transaction Detail" section reports different dates for those transactions.
March Brokerage Statement - Page 12
The "Transaction Detail - Purchases and Sales" section reports that the position was Opened on March 21 and Closed on March 22. Aside from the discrepancy regarding the transaction dates, all other data align including Cost Basis and Proceeds.
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First, the Short Sale (opening the position) is reported with a Trade Date of March 21:
March Brokerage Statement - Page 19
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​​And the Cover Short transaction (the purchase closing the Short Sale position) is reported with Trade Date of March 22:
March Brokerage Statement - Page 21
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Two positions apparently existed, but only one was actually reported, and the recordkeeping "error" cleverly conceals the omission. (i.e., the "Transaction Detail" record is missing the day trade transactions that occurred on March 23, and the position is also missing from the "Realized Gain (or Loss)" accounting--which reports the data for the March 21 and 22 transactions)
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The 2023 disciplinary action against Barclays provides affirmation that the aforementioned bookkeeping “errors” served to conceal transactions that had been omitted from the official records. This is indicated moreover by the notification that frequently appeared upon signing into the Schwab Mobile App:
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"Some of your accounts are missing historical data"​​​​
2023 FINRA DISCIPLINARY ACTION
The FINRA Disciplinary Action against Barclays Capital directly affirmed that "positions were not reported" "as a result" of "coding errors" that caused the exact species of error as presented above. In all, it's a rather convoluted way of saying "TRANSACTIONS ARE MISSING FROM THE OFFICIAL RECORDS."
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Specifically, Barclay's consented to the finding that:
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"[C]oding errors caused positions that were either booked or rebooked after the trade date to be reported with a trade date that was later than the actual trade date. As a result, positions were not reported during the time between the actual trade date and the later, incorrectly reported trade date" (FINRA A.W.C. No. 2019061076001)
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Indeed, "coding errors" coincided with Schwab's erroneous accounting, too, as described by "Exhibit S"​​​​​​
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