Trade Error Management

Trade error management is how an investment adviser logs each trade error, finds its cause, restores the client and decides who pays under its trade error policy. Trade Error Management does that work as a conversation with seven agents that open each case, rebuild the order from the logs, cost the correction per client and apply the policy clause by clause. A compliance officer decides, a second person or the CCO approves, operations books the payment and fund accounting confirms the client is whole.

A trade error policy is the adviser's written rule for what counts as a trade error, how it is reported and corrected, who pays and who approves; trade error policy and procedures are a standard section of the compliance program that the annual review under Rule 206(4)-7 tests. At setup the Policy agent reads your own policy into rules, each tied to its clause, and compliance accepts each one; in the working solution Trade Error Policy v5.1 became 14 rules. On every case the agent quotes the clause it applied and the approval route.

Under the sample policy the firm pays for errors caused by its people, systems or vendors (§2.3), the broker pays when it departed from the firm's instruction (§2.4), and the client never bears an error the firm caused. A gain stays with the client account in which it arises (§2.5). The firm's share is booked from its trade error account, never from client commissions (§2.6). When a broker owes the loss, the Policy agent drafts the claim and keeps the 10-business-day clock, after which the firm pays the client and pursues the claim.

Not in this solution. The Cost agent keeps each client's amount separate and never nets gains against losses across clients, and the Review agent recomputes every dollar on its own. ERISA plan accounts follow their own clause (no gain netted against any loss, no corrective cross trades), and Luxembourg UCITS funds get a CSSF Circular 24/856 assessment.

Under T+1 a wrong allocation usually settles before anyone sees it, so the case has to open from the first signal. The Intake agent watches reconciliation breaks, post-trade alerts, custodian notices and broker letters, and the Reconstruction agent reads the time-stamped allocation and affirmation records kept under Rule 204-2 into the timeline, each event cited.

The Advisers Act says nothing specific about trade errors, so examiners test each one against the firm's own trade error policy and its fiduciary duty, and typically ask for every trade error since the last exam and how each was resolved; the SEC's fiscal 2026 examination priorities put advisers' adherence to fiduciary standards first. The examiner pack builds that answer from the record: the trade error log, each case file with its evidence, policy versions, decisions and signatures, the audit trail and agent versions, hash-verified, with wealth client names and account numbers masked and every download logged.

Yes. The agents propose and never decide, book money or edit a source system. A compliance officer decides with a reason code, a second person approves (the CCO at $25,000 or more), the trader who made the error never approves its correction, and every override is logged with its reason.

The Agentic Solution Engine builds and deploys it from your requirements and documents (your trade error policy, approval limits, fund register and a sample of past cases), and it goes live once every quality gate has passed. First-time setup connects the systems of record, reads the policy into rules for compliance to accept, maps funds and approvers, and replays past cases so you can compare the agents with what your people decided.