I had a brand new converter do a similar thing and trashed a fresh built 700 several years back. Mine came from jegs, they replaced the converter, but I ate the rest.
Mine filled the trans with slivers, basically rendered it useless, I fortunately had another on the bench and elected to freshen it using many of the fresh parts from the damaged one. There was so much debris in it that I was worried about getting it all out. I caught it as soon as it let loose, so there wasn't much damage to clutches, but the pump was trashed. I was pleased that they actually replaced the converter. I can't remember which failed, b/m or tci... I have no clue why it failed, never before or since. I had a comp cams cam self destruct during break in once, and they offered bearings, pump, etc along with a replacement cam and lifters, the issue to me was the labor. At least they back the parts...
I have built engines since the late seventies, shade tree, at first, then as a mechanic, then as a way of life... I fix things...that was the first one that I had issues with on initial break in. The tech at comp and the senior sales rep at jegs both told me that the new cam blanks all come from the same supplier overseas and are inferior to the past ones. They test ok as far as Rockwell hardness, but some don't seem to hold up. I used the break in lube, the correct lifters, valve springs. etc... coincidentally, it was a Ford engine, and the only other cam failure that I experienced, other than high mileage related, was a crane solid cam in a Ford where one lobe came apart, it looked like someone took a hammer and chipped the edges off, but that was a long time ago and well after break in. The modern rollerised cams don't create the same friction as flat tappet, and I believe that's why the materials and lubricants aren't designed to combat it. Its cost prohibitive to convert from flat tappet to roller. It's definitely a buzz kill to have to redo all of your work due to a faulty or inferior part... It could have been a lifter not spinning or who knows, it happened fast. As for the debis in the trans, I started installing external spin on oil filters on them after that failure to hopefully reduce the possibility of a reoccurrence. My thought was to stop the pump from feeding it throughout. Finding space is challenging though. There are in line screens that are available to go in the lines, but I don't like that idea. It wouldn't take much to reduce the line pressure and cause a failure.
