Chicago Futures Trader Charged with Causing $13 Million in Losses from Fraudulent Trading Scheme

Discussion in 'Financial Futures' started by ajacobson, Jan 23, 2018.

  1. Bobbybax


    In the old days of the "Brazilian" trade, the clearers risk equaled your gain.
    #11     Jan 24, 2018
  2. comagnum


    Don't put on the trade if you cant do the time.
    #12     Jan 24, 2018
    bone likes this.
  3. TraDaToR


    950000 deep out of the money options...LOL
    #13     Jan 24, 2018
    bone likes this.
  4. bone

    bone ET Sponsor

    I know, right ?!?!!:p. WTF kind of firm Principal or Risk Manager allows that kind of position... And in terms of risk management - a simple free Excel options pricing macro off the internet would have exposed the whole charade.
    #14     Jan 24, 2018
    tommcginnis likes this.
  5. tommcginnis


    So often, what passes for "management" in finance (of all sorts!) is knee-jerkedness, *preceded* by severe blinders, lorded-over by CYA maneuvers. This includes Chicago, but also (apparently) Rock_Cap. The answer to your, "Surely, the CBOE has...." is a soft-peddled "no."

    Nobody wanted the rock the boat, challenge the status quo, bring up ugly numbers, work the late shift, etc etc. I'll bet we've *all* seen it. (But we hold certain institutions to such high station -- "THEY would never act so short-sighted as this...."

    No-ooooo. :rolleyes:
    #15     Jan 24, 2018
    bone likes this.
  6. TraDaToR


    And what about CFTC? o_O
    #16     Jan 25, 2018
  7. Sig


    I don't think the CFTC has any reason to question someone simply for purchasing OTM options that expire worthless? What's the Futures Act crime there? You have to remember, federal agencies have assigned jurisdictions and jobs. Finding an employee trying to trick his boss into a higher bonus isn't one of them.
    #17     Jan 26, 2018
  8. TraDaToR


    Yes. But I was thinking about position limits. They don't apply to options?
    #18     Jan 26, 2018
  9. traderjo


    - in such a prop situation if the long option position is not closed does the trader gets the bonus/ payment? I mean are these guys not paid only on "actual Realised profits"
    also I am assuming that the firm funded him to purchase those 950000 option knowing that worst case scenario is 100% loss
    so was the 13 million cost of those bought options? I don't get it
    #19     Jan 30, 2018
  10. newwurldmn


    Typically paid (and fired) on marked to market.
    #20     Jan 30, 2018