Hypothetical Banking Fuckup

[liquid]

This is quite an unusual situation, however I have a "friend" who is an active trader in the derivative markets and he has several accounts with different brokers/banks. One of these had poor service and basically was not knowledgable of the type of trading he was doing and it ended up pissing him off and costing him money. He let them know of his dissatisfaction and they told him it was a problem with the algorithm they used in their system and they were attempting to remedy the problem. Well after one such incident my friend decided to pull the money from one of these accounts with one firm. He spoke with the manager and they were going to next day the check to him, he agreed and they apologized (initially he wanted to come over to the local branch and get the check that afternoon, but was told this was not possible). Then he gets a call back from someone else at the firm telling him he CAN come by and pick up the check so he does, and deposits it in another account and all is well. 3 weeks later he is going thru his accounts and realizes this account which he had picked the check up from is still showing the balance (of which he received) in the account. Slightly amused he uses an automated on-line option of having a check sent to him. He then promptly receives an email stating the check should be received within 7 business days. Now my "friend" is a busy man and as stated he has many accounts with different firms and it is very possible for him to have overlooked that he had already received this money. We are not talking about a small amount of money here, but less than 100k. What were to happen if as an oversight he actually does receive the check and then cashes it and moves that money into some other account. It would appear that the firm that issued 2 checks would be at fault and they could request the money back, IF and when they catch their error. Would my "friend" be responsible for anything due to their poor accounting practices?

[Bob Smith]

Originally Posted by liquid

It would appear that the firm that issued 2 checks would be at fault and they could request the money back, IF and when they catch their error.

Which is a very likely scenario.

Would my "friend" be responsible for anything due to their poor accounting practices?

Yes, your "friend" would have to return the money. Doesnt matter if he already spent it or not, the bank/brokerage is entitled to their money back. Lax accounting practices or oversight would make zero difference in the legal outcome; the bank gets their money back.

Also, keeping the money, and with the manner in which it was requested/received, could be prosecuted for fraud, and based on the amount of money involved, could also be grand theft.

[liquid]

This is as I anticipated. So basically my friends plan was to go head and cash the check, IF the firm catches the error, (which he agrees is a likely scenerio) then great, he will observe the misunderstanding and wire the money back to them. If they don't catch it, well then that is even better. Just wanted to see if there was any legal implications in cashing the check, so basically worse case scenerio is they ask for it back, correct???

[Bigkarch]

sorry I did not read the entier posts..so I let Bod be number herer

[Bigkarch]

I deal with criminality...and legal enforcement...

[Bob Smith]

Originally Posted by Bigkarch

sorry I did not read the entier posts..so I let Bod be number herer

Huh?

[mr.nitro]

heres a simuar situation I had. about 4 months ago someone stole my debit card number and bought some goods online. I reported it to my bank and they returned the funds to my account. I also was able to get the number of the online store the purchases where made from and cancel the order before it was shipped. they also refunded me the money. but just last week the bank caught up with me and took the money back leaving my account in the negative numbers.

[Bigkarch]

Originally Posted by Bob Smith

Huh?

no I was not drunk

[Bigkarch]

Originally Posted by liquid

This is as I anticipated. So basically my friends plan was to go head and cash the check, IF the firm catches the error, (which he agrees is a likely scenerio) then great, he will observe the misunderstanding and wire the money back to them. If they don't catch it, well then that is even better. Just wanted to see if there was any legal implications in cashing the check, so basically worse case scenerio is they ask for it back, correct???

they'll catch it....but if he spends it and they catch it..he still has to pay it...dont spend it..

[liquid]

Update - the check was received and deposited in another account more than a week ago. Now we will wait and see what happens.

[LiquidGib]

liquid ha, you have my name ;(

[bafriend]

Basically, your friend is unethical, dishonest and a thief in that he knowingly requested funds be sent to him that he knew not to be his own; he then cashed the check, and is waiting now to see if the brokerage firm will catch it's mistake. This is called unjust enrichment and yes it can be prosecuted criminally and civilly. His actions reflect a selfish and wanton disregard for the well being of others -- even corporate others.

How would he feel if someone did this to him?

Frankly, what you've described is appalling.

[liquid]

Yea I've been telling him he's a bad boy, but he doesn't listen....I do have ALOT of sympathy for those poor little billion dollar brokerage firms too, where is the justice in the world?

But seriously it could be considered bad Karma by some but then again it surely must have been an oversight on his part to cash the check.

In any case if the brokerage firm is this inept at doing business maybe they need to make some changes or worse things than this will happen.

[liljunior]

hey sorry coming in late on this one...

Best thing I would be able to come up with for you "friend" to get anything out of this would be for "him" to put it into an account that will get him some "no loss high interest" accnt.
In Oz we can use ING to get 5%. this will do and it would prob take up to a 3mnth (1/4 year) to find out the money was missing...but this is valid for 7 years...so don't spend it if it's near 100k...

[Joffa]

Originally Posted by liquid

In any case if the brokerage firm is this inept at doing business maybe they need to make some changes or worse things than this will happen.

Think of it this way: your friend is actually doing them a favor. He is encouraging them to fix the problem that is causing their ineptness be it software, personel, etc. b/c the next time they do something like this it could be for an amount much larger than $100k

~Joffa

[perp69]

Originally Posted by liljunior

hey sorry coming in late on this one...

Best thing I would be able to come up with for you "friend" to get anything out of this would be for "him" to put it into an account that will get him some "no loss high interest" accnt.
In Oz we can use ING to get 5%. this will do and it would prob take up to a 3mnth (1/4 year) to find out the money was missing...but this is valid for 7 years...so don't spend it if it's near 100k...

Exactly!!! Put that money to work. I would buy some real estate to flip but that is just me. The safe bet is some kind of interest bearing acct. If and when they finally fiqure it out you have made some interest on their money.

[Pro-Forma]

just to let you know liquid, your friend commited a federal offense- wire fraud and judging by the amount (sorta speculating) at least 50K, if he doesnt pay the money back at their request, an example is likely to be made of him. If he is dead set on hsving the money, tell him he better have well-versed "oversight" story