ANNOUNCEMENT- seeking traders interested in overturning the PDT rule

Discussion in 'Professional Trading' started by iceman1, Feb 8, 2006.

  1. Seeking any and all traders who have had the PDT rule ever applied against them (or anyone they know) at anytime since its inception. This would include any current traders who have account(s) that are less than 25,000 and who have been altering their trading style and/or activity based upon concern over the PDT rule. This would also apply to many options traders with accounts under 25000.

    It is my intention to take whatever action is necessary in an endeavor to overturn the PDT rule and related enactments that are against public policy, arbitrary, unjust and borderline unconstitutional with respect to retirement accounts (as contrary to ERISA). Hopefully it will be amicable as most bad judicial law arises from the stubbornness of parties in failing to settle issues.

    The application of PDT to options is unjust on its face. It is against the spirit and import of the law -- in the first place. How anyone ever interpreted the Rule to apply to directional options is beyond me. You can’t even make 3 options trades in a 5 day period in certain accounts yet they allow an 18 year old who reads a book to day trade 4/1 margin EVERY day. Give me a break. If their goal was to protect traders and investors from themselves then why allow anyone regardless of experience, skill or age to trade 4/1 margin?!

    In any event I am asking that all concerned traders either:

    1. PM me on ET
    2. email Deleted.
    3. post info or email on this thread

    I already contacted the NYSE a couple of times last year to voice some of my concerns about these Rules and some others, even though they have not affected me, often. At said time they had asked me to write my concerns to them as well as contact the SIA (securities industry association). I did not follow-up as yet due to other matters taking precedent.

    But today I had a small IRA account I was actively trading, and did not know that it too was subject to the PDT rule. It was locked today due to 3 trades. This is the final straw.

    Government and its agencies have no business telling people how they can invest or trade their funds if there is no overriding public policy issue that will withstand public scrutiny. Where was all this red-tape and regulation back in the 80s and 90s when Wall Street was allowing their own to rip off investors. We have enough parent patriae laws on the books, and with the recent (anti) Patriot Act this country has sunk to a low in terms of dignity and ethics in how it regulates its citizenry. It is indeed true that for “evil” to exist (i.e. bad laws) all it takes is for good people to do nothing. My generation stood up, was counted and made a difference. Nowadays that seems less common. No one seems to care to protest much about any abuses by government, large institutions and/or agencies. Fewer checks and balances exist therefor since so many pols are in the same special interest bed and don't budge on certain issues unless they get bribed by some lobbyist. Frankly, I think Nicolo Michiavellia should be exhumed and installed as President the way things are headed lately in the securities markets, and with respect to individual rights. When the pendulum swings in this "free" country it always swings too far.

    Today we see far too much apathy in the USA which takes away from adequate power to the people. Thus - we have had this absurd PDT rule exist all these years because no one had the time or guts to stand up to fight “City Hall”!

    This is not a liberal or conservative cause. This is about less involvement of government and its agencies -- who constantly feel the need to dip their hands into our pockets for no EXPLICABLE reason. This capricious pdt Rule (like most bad law) was passed out of panic. Why was the limit decided to be 25000? Why not 20,000 or 30,000. You mean to tell me that anyone who trades THREE (3) TIMES in a FIVE (5) day period is a so-called “day trader”. Is that like being a felon? This defies reality and is unjust. I guess if anyone had read the Federal Register we might have had the opportunity to object. Now tell me -- what citizen (without a lobbyist) ever read the Federal Register? You ever do?

    Ask most ET “day traders” and they will report doing hundreds of day trades in 5 days! Hundreds --- not THREE! Thus the Rule is absurd on its face and has no connection with the concept of “day trading” or any of it's ALLEGED abuses for which it was allegedly enacted in the first place.

    In any event ---- I invite all citizen-traders who are concerned to reach me as aforesaid so I can collect names and thereby have some fuel by which to seek to abrogate this absurd PDT rule. I will also be seeking concerned traders from other websites, and will open a website for the cause. There is a chance the good folks at the NYSE, SEC, NASD may well listen to our concerns and pleas IF we can demonstrate a strong palpable interest amongst traders in overturning this absurd Rule, and some of the recent amendments to 431.

    I am willing and able to spend the time in an effort to overturn this Rule. IF necessary I will file a lawsuit myself in the Northern District of Illinois. But it would be better if we had 5-10 trader/plaintiffs from varying geographical areas. Although I believe strongly that one man (or woman) can make a difference it always helps to have numbers in seeking to get the often staunch and inflexible public institutions and agencies to bend their views on given issues.

    IF legal action does become necessary then having a class might be more effective.

    Stay tuned... and please contact me


    (moderator please put this thread in the appropriate category IF this is not the correct Forum albeit it does concern trading)
  2. i'm assuming that PDT is the same as NASD rule 2520? If so, I believe it is 4 trades in rolling 5 days. I understand your point, though. I broke that rule about 16 times - every account got restricted for 90 days. Yeah, it's a pain in the arse to change brokers.....

    Why was 25k set as the minimum? There are many times in law where there may be a grey area, however making a subjective ruling every time would become taxing. 18 to smoke, 21 to drink, etc. We all know people who did those things before those the requisite minimum age who felt mature enough to handle them. And yet it is maturity that the law argues is what is in too short a supply for 'under age' drinkers and smokers to cope with the difficulties of consumption.

    I believe the 4 in 5 rule is stupid, however. I agree with you point that if you are a 'day trader,' you're making way more than 4 in 5.

    On the other hand, why take any action? Most traders have way more than $25k (if they're retail traders), so the rule in total does not apply. In addition, you ask most traders and I believe they will say never to use any money that really matters. That 25k is just a buffer. This rule affects so few traders, I doubt you'll get much support. I say this and watch my acct drop below 25k tomorrow! ::::does opposite of knocking on wood:::::

    good luck!

  3. forgot to check email notification
  4. there have been lots of threads on ET concerning the PDT rule - I recall many of guys complaining about the Rule. It will be interesting to see how many actually want to do something even if they have now one or more accounts over 25000 now, or have changed to futures.

  5. what did Henry David say in Civil Disobedience?

    "government is best... which governs LEAST"

    That's a joke now --- since we have government imbeciles enacting completely unnecessary regulations like the PDT rule telling citizens who are much smarter than they --- how we should trade and invest our money! What a joke. Hey guys worry about keeping the corrupt analysts from the 80s and 90s from resurfacing - worry about blatant insider trading and front-running and other sundry abuses on the Street!

    Worry less about <25000 accounts!


    Still looking for names of interested traders who want to be part of overturning the PDT rule.
  6. weld1


    i agree, that rule sucks. if a guy like me wants to trade when not working and does'nt have 25 g laying around he should still be able to do a little trading when he is off work. there are so many abuses in the market, account size should be the least of their concerns!!! i think people will do things they should'nt do to get the 25000 and thats a problem in itself.
  7. weld1


    sign me up!

  8. Bravo!

    good points.

    PM me with your email and any contact info you wish to give out. I will send you a copy of corresponence with the agencies !
  9. I must have missed your reply from yesterday. Thanks for your input.

    It is the principle that here we have agencies who on their watch have witnessed some of the most blatant corruption and scandal yet these morons saw fit to bang the individual investor with an arbitrary law. All the while corrupt analysts get off with a slap on the wrist and a large bonus, etc. etc. etc.

    Further why should anyone have an arbitrary barrier like 25000 to short term trading in the markets if they choose, and qualify to open an account?

    More importantly if they seek to protect people from overtrading and/or loss of capital or whatever the heck this PDT rule was enacted to prevent- then start requiring classes, training, testing and series 7 examination by brokers before allowing anyone to open a retail account in any size and also before allowing anyone to trade options.

    But you are correct it will be interesting to see how many are willing to join in this pursuit.
  10. when was this rule put in place? I'd be careful that you bring this up with a lot of steam behind it might bring to their attention that they haven't adjusted for inflation, added risk, etc. and raise the minimum to 50k!

    I think the rule is silly, but I don't fully understand the impact it has on traders. It doesn't bother me, and I'm just a 24 yr old "broke" grad student! If people who go into chapter 7/13's four or five times can find financing for a 80k house, then traders can sure find some creative ways of getting capital.

    You are right that there are many other issues more important than this one. Why not tackle any of those? How about a harder tax on specialists or a fee to show fake size! These are examples that would never happen, but there are better issues on which traders could spend their extra time.
    #10     Feb 9, 2006