Registered Representatives can help themselves avoid loss
and reduce exposures using a few simple tips. Below is the first in a series of
loss prevention techniques we will be providing on our blog to help Registered
Reps identify ways to improve their risk management strategy.
Claim Scenario: The client alleges that the registered representative failed to execute simple option trades on his equity position. The client was trying to hedge himself from downside losses by implementing the use of an option strategy using calls and puts. The client alleges that the registered representative refused to execute this option strategy even though funds were available to fund these options. The client further alleges that the registered representative was vague in his reasoning for not executing these orders and due to this failed execution, the client’s stock was not hedged and suffered losses of $800,000.