Hargreaves Lansdown clients holding Tesla shares were left unable to sell their holdings ahead of the electric car maker’s recent sell-off due to a delay in the trading system the platform uses.
According to the Times, Tesla made a five-for-one share split on 31 August which meant each share became worth a fifth of its larger share value but the combined value remained the same.
It said some investors, including those using Interactive Investor’s platform, could access their shares from Tuesday 1 September, but Hargreaves’ customers had to wait until Thursday 3 September by which time Tesla’s share priced had plummeted.
It said at the close of trading on 31 August, Tesla’s share price was $498 but by Thursday 3 September it was down to $407.
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‘I didn’t want to deal at that price’
The newspaper spoke with two Hargreaves clients, including Sadek Salam, a landlord from southwest London, who holds Tesla shares on two different platforms.
He said: “On the 212 platform [a trading app] I was able to sell on the Tuesday at $501. But by the time I could trade on Hargreaves the price had fallen to about $400 and I didn’t want to deal at that price.”
Another trader, Dean Wilkinson, a sales manager from Hampshire, said: “I would have been able to make a profit of between £700 and £1,000 selling on Tuesday, but when I eventually managed to deal I ended up suffering a loss of £400.”
Issues with Crest system to blame
Hargreaves Lansdown said the delay in issuing shares following the share split was due to the Crest system it uses to deal in overseas shares. Crest is the UK and Ireland’s main hub for settling bond and equity deals.
Hargreaves told Portfolio Adviser the issue had been flagged to investors on 12 August.
A Hargreaves spokesperson said: “We advised investors on 12 August that under the Crest system, shares would not be allocated to their accounts until 3 September and until then, they would not be able to trade more than 20% of their holding.”
Interactive Investor, however, conducts overseas trading through local brokers.
Crest also suffered an outage for most of Friday 11 September, which the Financial Times reported was responsible for forcing the Bank of England to delay a gilt auction on Monday 14 September.
Tesla’s share priced dropped 21% on 8 September, as part of a wider sell-off of US tech stocks, wiping more than $82bn (£63bn) from its market capitalisation. The price has since recovered and on Monday at midday is was trading at $442.
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