beware of somone else cutting a deal for your group

Discussion in 'Prop Firms' started by ghostrider, Feb 19, 2003.

  1. there are still alot of dirtbags who will try and get you to leave as a group and try and get overrides on your commissions, charging you a higher rate......Just heard a sad story about a dirtbag in who, Is in the process of trying to screw the people who took him in and taught him......

    do your own negotiating

    dont trust people who try to represent you
  2. nitro


    Does that dirtbag post here on ET?

  3. CalTrader

    CalTrader Guest

    Just like in any other business you need to get everything in writing. When I first started out in business I was amazed at the number of scams that were pitched to me and the number of supposedly reputable business people who were simply sharks and hacks.

    Nothings changed today. In fact things have gotten worse, not better. There are lots of firms and individuals who I refuse to deal with because of their unethical methods of doing business. Some of these people and companies are well known names.

    Just remember: If you ask someone to put their claim or guarantee in writing and they balk, then you can be 99% sure that they had no intention of honoring their promise........
  4. yes, but thats the end of it, my intention is not to expose, but to give a honest heads up that there are some shift characters out there
  5. CalTrader

    CalTrader Guest

    There are shifty characters everywhere. It would be better if you named them and described the scam in detail - otherwise this is a pretty useless thread ....


    I completely understand your point. However, it is common practice for one guy to cut a deal at a firm where he gets overrides for the whole group he brings in.
    For example, if he gets 10 guys then their commission will be "X", if he brings 15 guys then their commission will be "Y" etc. The point is, their new deal should be substantially lower than what they were paying at their old firm....even though someone is getting an override on their commissions.
    The problem that I have with this is when the guy cutting the deal doesn't inform the group that he will be getting a cut for the legwork and negotiating. If he's honest about it, and everyone's commissions are going to be lower anyway, then it is normal business.
  7. CalTrader

    CalTrader Guest

    middlemen -er ..middle people - try this type of scam all the time.
    I call it a lie: if you dont know the full story then you were scammed. The easiest way to stop this is to require the person in the middle of the deal to disclose their deal. If they refuse you should walk ... actually run. You can be sure that they are getting a huge markup. Sometimes people new to the business have to take deals like this when they are just starting out. Once you are established you should recognize sharks for what they are and steer clear when they refuse to disclose or put in writing all of the deal parameters ....
  8. What you say depends on the circumstances of the person getting the override. If he is a recruiter then it makes sense. If he is supplying trading knowledge/teaching for the group or trading capital then it probably makes sense depending on the relationship of the group. But if it is considered a fellow trader/friend then it is shady especially if he is just trying to get an override because he happens to be the first one to talk to someone. If you were a group of traders used to trading together as a team and you found out that you could get a dollar lower in your commission rate because someone is taking an override on you who doesn't deserve it then you would probably be pretty pissed, especially since the rate is being given because of the groups volume


    The whole point of negotiating as a group (or for a group) is to have more bargaining power because of your volume. If your whole group gets lower commissions (say .0045) and someone is making a cut (.00025) the long run you're still better off than if you had gone by yourself----regardless of the middleman cut.

    That being said, if the middleman is your friend or part of the group then he should disclose his cut to everyone.
  10. What is funny is most of the time when I hear this go on the guy cutting the deal and skimming the top is not trying to get 25 cents. They get greedy and go for a dollar or more. That in of itself is not bad like I said if they are the ones training everyone or putting up money for the other traders. I guess it depends on the situation.
    #10     Feb 20, 2003