Schwab had a bug on their platform that caused double selling and double buying in client cash accounts. Yes, it is a fucked up disaster. And yes, I'm already talking to lawyers so please none of the "lawyer up" shit, I know what I'm doing.
I'm just here to tell you the story.
This bug caused my 401(k) cash account to be out $180k. See my Sunday post last week if you want details: https://www.reddit.com/r/stocks/comments/loffqz/a\_bug\_in\_schwab\_caused\_my\_retirement\_account\_to/
Forget about my account though. Look at the comments. This was me posting randomly on /r/stocks and without prompting for it, I got over 60 comments that said the same thing happened to them.
Let's figure this out with some (admittedly imprecise) napkin math:
- Suppose Schwab is \~5% of total stock market volume.
- U.S. Trading volume is maybe $1.250T (between Nasdaq + NYSE)
- Suppose the bug affects 5% of trades on Schwab. (This number has to be big enough account for the fact that so many comments appeared on my post)
- Suppose each illegal trade on average moves 10% before it gets resolved.
- Schwab is on the hook for any of these price movements that result in losses (half the price movements, because half were gains and some customers probably made out like bandits?)
- 1250000000000 \ 0.05 \ 0.05 \ 0.1 \ 0.5
= $156m per day? in what I'm referring to as "a giant ball of shit"
Important points:
- Schwab could be losing something on the order of hundreds of millions of dollars per day. Is the bug fixed? I have not seen any announcements about it. It's been over 30 days and I still haven't gotten a clear response from Schwab about my own personal issue.
- This has been a problem for months, according to the comments. Read through the comments on my post in /r/stocks.
- Schwab only has about $20B in total equity (according to Wikipedia, 2018)
- I could have easily left GME naked short in my account. I don't know what Schwab would have done, or how many accounts have gone naked short, and stayed that way...
It still does not appear that the markets have priced this event in, yet. At best, Schwab lost some money. At worst, Schwab is actually bankrupt. I (currently) don't think it's very likely that they're bankrupt, but I do believe the markets are mispricing their stock.
Schwab: If you don't want us speculating about how big this ball of shit is, then come out and say exactly how big it is. And tell us where the "fix it" money is coming from. Not client assets, I hope?
Stay tuned for some more traditional DD in the coming days/weeks.
Relevant Positions \(about $50k of puts, doubled down since last post\)
Feel free to read my last Schwab post before I doubled down: https://www.reddit.com/r/wallstreetbets/comments/lpxqzm/a\_short\_thesis\_on\_the\_charles\_schwab\_corporation/
TLDR: I hate the stock, I'm buying puts, and Schwab GIVE ME MY FUCKING money back