Forums - Cy Group is not registered with FINRA

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Posted by HeSaidSheSaid on 04-05-12 12:52 AM:

Cy Group is not registered with FINRA

initially, I searched the FINRA website to see if Cy Group is registered with them, but nothing came up. then I sent email to FINRA to inquire about the group registration, they also confirmed the firm is not registered with them.

http://www.cygrouponline.com/

http://www.finra.org/

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Posted by shneed on 04-05-12 01:11 AM:

now what?

Posted by rmorse on 04-05-12 01:28 AM:

They don't claim to be broker dealers on their website. What made you check?

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Posted by EvOTraderV2 on 04-05-12 02:22 PM:

I think they're a sub of a CBSX b/d. CBSX firms are not registered with FINRA. FINRA is a different SRO and regulates mostly retail firms.

I personally have never dealt with them but they've been around a while. If they require a series 56, they are operating legally and your account will be registered with a heavily-regulated broker-dealer. If the accounts are off-shore and they are operating out of the US, then you may want to do your due diligence prior to selecting a firm to trade with.

disclaimer: I have no experience with the group. I have never traded with them and I'm not affiliated in any way, shape, form, scope or measure. Just putting out the facts.

__________________
EvO

Posted by t0pd0g on 04-09-12 03:29 AM:

They are NOT a sub of any CBSX BD. They are operating a unregistered and illegal BD in the US and these firms are aggressively being shut down by the SEC. BEWARE!

TD

Quote from EvOTraderV2:

I think they're a sub of a CBSX b/d. CBSX firms are not registered with FINRA. FINRA is a different SRO and regulates mostly retail firms.

I personally have never dealt with them but they've been around a while. If they require a series 56, they are operating legally and your account will be registered with a heavily-regulated broker-dealer. If the accounts are off-shore and they are operating out of the US, then you may want to do your due diligence prior to selecting a firm to trade with.

disclaimer: I have no experience with the group. I have never traded with them and I'm not affiliated in any way, shape, form, scope or measure. Just putting out the facts.

Posted by shneed on 04-09-12 06:54 AM:

why do you care what type of a firm they are, do they owe you money something, did they mistreat you?

Posted by EvOTraderV2 on 04-09-12 02:33 PM:

lol i doubt they're being shut down. There are quite a few ways to operate prop firms legally in an inexpensive manner. I highly doubt the SEC gives a shit being there isn't 1 account of someone they owe money to.

__________________
EvO

Posted by rmorse on 04-09-12 02:41 PM:

I don't know anything about this firm Cy Group. However, set up properly, it is possible to run a prop trading business as "customer" rather than firm. You just can't claim to be brokers, mark up commissions or claim the sub accounts are owned by the traders. These are not all the issues that need to be addressed. But, it can be done and we have clients that do it. Profits are derived from trading, not fees.

Hedge funds are set up in this manner. Typically a hedge fund is an LP and a trading group would choose an LLC.

Bob

Posted by ScalperJoe on 04-11-12 01:23 AM:

Quote from rmorse:

I don't know anything about this firm Cy Group. However, set up properly, it is possible to run a prop trading business as "customer" rather than firm. You just can't claim to be brokers, mark up commissions or claim the sub accounts are owned by the traders. These are not all the issues that need to be addressed. But, it can be done and we have clients that do it. Profits are derived from trading, not fees.

Hedge funds are set up in this manner. Typically a hedge fund is an LP and a trading group would choose an LLC.

Bob

That's good info to know. However, if profits are derived from trading, and not on a markup of commissions, then wouldn't the traders be considered employees, and not "members" as with most registered prop firms?

Posted by rmorse on 04-11-12 02:02 AM:

Quote from ScalperJoe:

That's good info to know. However, if profits are derived from trading, and not on a markup of commissions, then wouldn't the traders be considered employees, and not "members" as with most registered prop firms?

Like any partnership, if the trader is an investor and part of the LLC operating agreement, they are either a limited or general partner. If not, they are an employee or can be an outside side party hired to do a job and paid by 1099 not w2. You need a good attorney to address the structure you want. Once set up, it should not be an issue. The LLc can give trading rights to any party that is acceptable to your broker and the managing partner of the LLC.

Bob

Posted by EvOTraderV2 on 04-11-12 02:35 AM:

Quote from ScalperJoe:

That's good info to know. However, if profits are derived from trading, and not on a markup of commissions, then wouldn't the traders be considered employees, and not "members" as with most registered prop firms?

This is incorrect. The correct pay structure for a trader is a member with a profit-split agreement. The secretary, janitors, and back-office functions/processes that are handled by hourly or salaried employees may be w2 or independent contractors based on whatever the agreement is between the firm/employee. The correct structure for trading profits is either a k1 (form 1065) if the trader is claiming the loses or a 1099 if the firm is claiming the loss. With a broker-dealer issuing a k1 you can claim up to $3000 in losses in any given calendar year.

If you trade for a UK b/d, you have to report the income to the US as foreign income, I think 1040W. If you have a contribution and lose it, you won't be able to claim these loses. The same goes for if the firm issues a 1099 only on profits. In this case, your capital is at risk in the market without any government protections for losses you may accumulate whereas you can write off the first $3000 in losses if it's a broker-dealer and you are registered in a trader capacity.

__________________
EvO

Posted by cactus_trader on 04-11-12 02:57 AM:

Quote from t0pd0g:

They are NOT a sub of any CBSX BD. They are operating a unregistered and illegal BD in the US and these firms are aggressively being shut down by the SEC. BEWARE!

TD

you need to be quiet and get off your high horse. you have been crying about CY for yrs

CY Group isnt ripping anyone off and never has. so just leave em alone

Posted by EvOTraderV2 on 04-11-12 02:49 PM:

Quote from cactus_trader:

you need to be quiet and get off your high horse. you have been crying about CY for yrs

CY Group isnt ripping anyone off and never has. so just leave em alone

I agree. I know a few traders that were with them. It's probably not the safest place in america to keep your money but it's far from a scam or a fly-by-night shop. At this point, they've been around at least 3-4 years and there's no complaints yet as far as I can tell.

That's not a recommendation to trade with them. Just putting out the facts.

__________________
EvO

Posted by promagma on 04-11-12 02:56 PM:

I got started with Cy .... just a $5k deposit back in '07. I have since moved on, but couldn't have gotten started without them

Posted by hitnrun on 04-11-12 06:58 PM:

cy group has been around for over 5 years with a good reputation
they run a different business model for years

traders should focus on trading & not worry about all the bs legalities

being with a registered prop does not make your money any safer
any firm can go out of business . your money is always at risk !

Posted by rmorse on 04-11-12 07:00 PM:

Quote from hitnrun:

cy group has been around for over 5 years with a good reputation
they run a different buinsess model for years

traders should focus on trading & not worry about all the bs legalites

being with a registered prop does not make your money any safer
any firm can go out of busines . your money is always at risk period

It's has less risk in a separate customer account in your name or the name of your entity. This would be covered by SIPC and not have the risk of commingling with other traders that you might not even know.

Posted by EvOTraderV2 on 04-11-12 07:20 PM:

Quote from hitnrun:

cy group has been around for over 5 years with a good reputation
they run a different business model for years

traders should focus on trading & not worry about all the bs legalities

being with a registered prop does not make your money any safer
any firm can go out of business . your money is always at risk !

even if you are insured, SIPC has 99 years to pay you back, legally speaking. The odds of you ever getting your money if a large firm blows up is slim to none. This is true for all firms except the very few politically-connected prop shops like GS. If you want your $ to be safe, put it in a too-big-to-fail company. Big brother will always come to the rescue.

__________________
EvO

Posted by hitnrun on 04-11-12 07:25 PM:

i would agree their are many ways to set up a proper stucture

most prop firms took the easy way with registering with the cbsx or another exchange so they could mark up commissions legally

always the commission based profit model

these days their are fewer advantages for the traders or prop firms
more hassle & higher fees for everyone with all the new rules implemented

Posted by EvOTraderV2 on 04-11-12 07:28 PM:

yea, the profit margins are not sustainable for a small firm with 100 traders. only the firms with 1000s of traders will remain. Subgroups will eventually be regulated too and once that happens their costs will put them out of business. Again, the profit margins are too law. It's just going to get more and more consolidated.

your $ is not even safe if its insured. These days you are better off just going overseas if you are a prop firm. It sucks that all the jobs in the industry are going overseas along with the $$.

__________________
EvO

Posted by hitnrun on 04-11-12 07:31 PM:

the market will take your money faster then any loss from a prop firm

traders have to accept taking risk in the market but also through the prop firm they choose to partner with so you have to do your dd

always a certain degree of risk & all you can do is try to limit your exposure

your money is locked up for 1 yr & getting paid once per month from most cbsx prop firms . most traders have to jump thru hoops , all for the leverage

Posted by Ferris on 04-11-12 08:37 PM:

[QUOTE]Quote from hitnrun:
always a certain degree of risk & all you can do is try to limit your exposure

Hitnrun - I believe that was the original intent of this thread. All traders should try and limit exposure when possible. If CY Group is an unregistered BD collecting commisions they are operating illegal in the U.S. They would be doing the same as Tuco or any other firm that has recently been shut down. This is not meant to scare anyone as this is just common sense. It is hard enough to make money in the market. I would reduce as many risk variables as possible. The choice of firms is entirely up to the trader. If CY does not ask or require a deposit, then great. If you put a deposit with them you have one more element of risk as oposed to a well capitalized regulated BD.

Posted by hitnrun on 04-11-12 08:48 PM:

not sure of cy structure but people should due their homework with any firm they choose registered or not
people like to badmouth any firm registered or not on here anyway

Posted by Itrade2009 on 04-12-12 01:21 AM:

I warned everyone about Epiphany for over a year and then they were finally shut down and a lot of traders lost all their money. Paramount was shut down as well:

http://www.elitetrader.com/vb/showt...threadid=195882

Just because CY hasn't been shut down yet doesn't mean anything. They are located in the US, take traders money as deposits and charge a commission. Those are functions of a BD and by SEC rules and laws they must register as a BD....they are not. It's that simple. Send them money at your own risk, I could care less....just letting everyone know the FACTS.

Quote from cactus_trader:

you need to be quiet and get off your high horse. you have been crying about CY for yrs

CY Group isnt ripping anyone off and never has. so just leave em alone

Posted by ScalperJoe on 04-12-12 05:51 AM:

Quote from Itrade2009:

I warned everyone about Epiphany for over a year and then they were finally shut down and a lot of traders lost all their money. Paramount was shut down as well:

http://www.elitetrader.com/vb/showt...threadid=195882

Just because CY hasn't been shut down yet doesn't mean anything. They are located in the US, take traders money as deposits and charge a commission. Those are functions of a BD and by SEC rules and laws they must register as a BD....they are not. It's that simple. Send them money at your own risk, I could care less....just letting everyone know the FACTS.

Team Trading recruited over 500 independent traders over three years as an unregistered firm, marked up commissions, and eventually closed shop without returning approximately $2 million dollars of trader deposits.

So the basic questions a trader should ask if they wish to do business with the firm are simple:

1. Do you require traders to deposit capital?
2. Do you mark up commissions?
3. Are you a registered broker-dealer?

If they say "yes" to numbers 1 and 2, and "no" to #3, then simply ask "how do you avoid the registration requirements of a broker under Section 3(a)(4)(A) of the Securities and Exchange Act of 1934?"

As rmorse suggested, there are other ways to properly structure the model. Also, firms located outside of the U.S. may be subject to different jurisdictions, and therefore may not be registered with SEC.

Conducting simple due diligence now will save time and energy later if you end up fighting for the return of your capital.

Posted by Itrade2009 on 04-12-12 01:45 PM:

Team Trading and all Oliver Valez and Charles Vacarro's scams are slightly different. He charges for "training", and then let's you trade "his money". If this is challenged by the SEC it would not pass the "stink" test. Also, last I checked the SEC was investigating his entities based on traders complaints.

Also, rumor has it that once you started trading with Team Trading you were always on a demo platform even though you were told it was a live platform. That way when you lost money "his" money you weren't really losing anything, but they pocketed all the money.

But like ScalperJoe said...always do your DD!

Quote from ScalperJoe:

Team Trading recruited over 500 independent traders over three years as an unregistered firm, marked up commissions, and eventually closed shop without returning approximately $2 million dollars of trader deposits.

So the basic questions a trader should ask if they wish to do business with the firm are simple:

1. Do you require traders to deposit capital?
2. Do you mark up commissions?
3. Are you a registered broker-dealer?

If they say "yes" to numbers 1 and 2, and "no" to #3, then simply ask "how do you avoid the registration requirements of a broker under Section 3(a)(4)(A) of the Securities and Exchange Act of 1934?"

As rmorse suggested, there are other ways to properly structure the model. Also, firms located outside of the U.S. may be subject to different jurisdictions, and therefore may not be registered with SEC.

Conducting simple due diligence now will save time and energy later if you end up fighting for the return of your capital.

Posted by EvOTraderV2 on 04-12-12 02:22 PM:

Quote from ScalperJoe:

Team Trading recruited over 500 independent traders over three years as an unregistered firm, marked up commissions, and eventually closed shop without returning approximately $2 million dollars of trader deposits.

So the basic questions a trader should ask if they wish to do business with the firm are simple:

1. Do you require traders to deposit capital?
2. Do you mark up commissions?
3. Are you a registered broker-dealer?

If they say "yes" to numbers 1 and 2, and "no" to #3, then simply ask "how do you avoid the registration requirements of a broker under Section 3(a)(4)(A) of the Securities and Exchange Act of 1934?"

As rmorse suggested, there are other ways to properly structure the model. Also, firms located outside of the U.S. may be subject to different jurisdictions, and therefore may not be registered with SEC.

Conducting simple due diligence now will save time and energy later if you end up fighting for the return of your capital.

I totally agree. Also, many groups operate under the umbrella of a broker-dealer such as the WTS firms mentioned earlier. Structuring a firm this way is completely legal and you are required to register, but you should ask if the group themselves is the broker-dealer & if not, who is the broker-dealer you are required to register with. You can also ask if the group is license (series 7 reps, manager with series 24)

__________________
EvO

Posted by ScalperJoe on 04-13-12 06:29 AM:

Quote from Itrade2009:

Team Trading and all Oliver Valez and Charles Vacarro's scams are slightly different. He charges for "training", and then let's you trade "his money". If this is challenged by the SEC it would not pass the "stink" test. Also, last I checked the SEC was investigating his entities based on traders complaints.

Also, rumor has it that once you started trading with Team Trading you were always on a demo platform even though you were told it was a live platform. That way when you lost money "his" money you weren't really losing anything, but they pocketed all the money.

You're right, paying for "training" when you're actually getting an account where they mark up commissions seems like a convulted workaround of SEC broker-dealer rules.

Although many complaints were filed against Team Trading with both the SEC and the NY Attorney General, it was mostly due to the firm's failure to uphold terms stipulated in a contract with its traders who funded independent trading accounts, not for the training programs.

Also, sworn testimony in court documents and other sources revealed over the years would lead any of their former traders to conclude that the rumors of demo trades were unfounded.

Regardless of what actually happened to all the money, the traders who have not yet been compensated for their remaining capital deposits will hopefully receive justice in due course.

Posted by EvOTraderV2 on 04-13-12 03:27 PM:

rumor has it velez's traders never traded real cash, just unmarked demo accounts

__________________
EvO

Posted by Itrade2009 on 04-13-12 07:56 PM:

Quote from ScalperJoe:

Also, sworn testimony in court documents and other sources revealed over the years would lead any of their former traders to conclude that the rumors of demo trades were unfounded.

Hey Joe...how are you?

Can you provide a link to that testimony since I have heard from a very good source that they have ALWAYS traded that way. And knowing the type of operation they run that shouldn't surprise anyone. There was a reason they only allow you to trade in a handful of liquid stocks...so you could never test if your order really went to the market in an illiquid stock. In a liquid stock there are prints going off every second.

Posted by ScalperJoe on 04-14-12 01:49 AM:

Quote from EvOTraderV2:

rumor has it velez's traders never traded real cash, just unmarked demo accounts

The trading platform was Orbis. The broker was Solaris Securities, and the clearing firm was Penson. Most of the trades routed through Direct Edge, and trade blotters were prepared by Prop Reports.

Court documents revealed many wire transfers to Penson. If they were faking the trades, there is no counterparty risk, and therefore no reason to send funds to the clearing firm.

It would be the scam of century if the trades were all in sim, but it's like you said, "rumor."

Posted by ScalperJoe on 04-14-12 02:11 AM:

Quote from Itrade2009:

Hey Joe...how are you?

Can you provide a link to that testimony since I have heard from a very good source that they have ALWAYS traded that way. And knowing the type of operation they run that shouldn't surprise anyone. There was a reason they only allow you to trade in a handful of liquid stocks...so you could never test if your order really went to the market in an illiquid stock. In a liquid stock there are prints going off every second.

Hi, check your p.m. regarding a link.

There was no restriction for independent traders, we could trade whatever stocks we wanted. You're right about the other part, prop traders who were in the training program could only trade a list of liquid stocks, however that list was developed much later.

I cannot state with absolute certainty that all the prop traders had real accounts. If there's ever a formal charge from any investigative authority, then it will probably become part of the public domain, and therefore will put an end to any rumor.

Posted by moneymonger on 05-29-12 02:49 AM:

My experience with ct group

I have traded with Cygroup in the past. Never had any problems.
for start-up traders who only want to risk 5k I do recommend CY.

Posted by Parliament on 06-07-12 06:32 PM:

This sounds like the best setup for the traders Does anyone know any prop groups set up like this?

thanks in advance

Quote from rmorse:

I don't know anything about this firm Cy Group. However, set up properly, it is possible to run a prop trading business as "customer" rather than firm. You just can't claim to be brokers, mark up commissions or claim the sub accounts are owned by the traders. These are not all the issues that need to be addressed. But, it can be done and we have clients that do it. Profits are derived from trading, not fees.

Hedge funds are set up in this manner. Typically a hedge fund is an LP and a trading group would choose an LLC.

Bob

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