Choosing a safe firm

Discussion in 'Prop Firms' started by Bluegar3, Aug 13, 2007.

  1. I've noticed that there are 2 types of prop firms.

    Type A:
    One where you have to get a series 7 and it seems like the firm is a broker dealer.

    Type B:
    The other type is where a group of people get together and trade under a retail account and you don't need a series 7.

    I always hear that you should go with the big guys like bright, assent, or echo. However I notice that if you join assent you joint tradestar? Is tradestar safe?

  2. The type B types were pretty much outlawed by an SEC sweep maybe 1-1.5 years ago. Type B nowadays are really under the radar. They can't get big enough to be noticed by the SEC again.
  3. soesito


    When were the B types outlawed 1 to 1.5 years ago? Any info on this SEC sweep? I never heard of it and have been around for a while.
  4. I have heard similar comments about Type B firms as described above. The only issue IS what type of BUYING POWER, under retail you are being told they will allow intraday. Obviously, that is the issue that would be tricky.
  5. They were not even supposed to exist for they were an end-around attempt to get around Reg T. There was an SEc enforcement letter a while back which detailed such. In fact, it was discussed ad nauseum here in ET threads started by an accounting firm, threads going back and forth, a conference call or a chat log session.
  6. cstfx


    It is illegal for a non-licensed prop firm to take deposits from traders and offer leverage on those deposits in a retail account and for said traders to expect SIPC protection.

    It is not illegal for a non-licensed prop to offer membership in a private LLC and manage the leverage of those investments in the group retail account provided said retail is in compliance with Reg T and for all members of LLC to take associated risks/rewards involved with such trading.

    It's all semantics.

    BTW, the above mentioned enforcement was born out of the Refco debacle when prop traders tried to claim that they were retail investors and that their depoists should have been protected under SIPC regulations. SEC ruled against them.