Registered: Dec 2007
04-13-08 07:08 PM
sd trader the only reason i pm'ed you is i thought you were affilaited with tuco which i'm not to sure you're not. as far as leverage i have nothing against it and if people want to get it then its up to them. yes you're correct wether s 7 or not any shop can close up. the whole pt is when you count on others for leverage and don't have your own sipc retail insured account you have risk, many on et have made millions using prop leverage and i'm sure if they lost there deposit tommorrow they'd say they knew the risk and are ok with it. and i'm not prop nor have i ever been a prop trader. i have nothing further to comment on this subject
The SEC charged Tuco Trading, LLC, and its principal, Douglas G. Frederick, with violating broker-dealer registration and antifraud provisions of the securities laws. According to the SEC's complaint, the defendants provide securities day-trading capability to Tuco's more than 250 traders who had approximately $10.2 million invested in Tuco. They permitted traders to day-trade securities in Tuco's own brokerage accounts at registered broker-dealers through sub-accounts created at Tuco for each trader.
The defendants enticed traders with services unavailable at a registered broker-dealer. As alleged in the complaint, they allowed traders to day-trade without meeting the $25,000 minimum equity requirement under NASD regulations for such trading. The SEC's complaint also alleges that for each $1 in the trader's sub-account, Tuco and Frederick allowed the traders at Tuco to use up to $20 of Tuco's equity, which has been invested by other traders, to purchase securities (20:1 buying power). NASD and NYSE regulations, however, only allow a day-trader to have 4:1 buying power.
"Tuco provided traders with trading capability not permitted at registered broker-dealers," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement. "This case warns investors that the additional trading capability comes at a steep price — the safety of their money."