Due diligence, why? Here's why!

Discussion in 'Prop Firms' started by Don Bright, Oct 12, 2006.

  1. First off, I'm not going to give the name of the Firm (for obvious legal reasons), but I will say that I am holding the "Suspension" papers for the Firm.

    2 pages of violations, and here are a couple of salient points.

    XYZ Trading and Mr. xxxx and others....

    "...violated Sections 15 and 17 of the Sec. Ex. Act of 1934.....(blah blah) (gets better)....violated exchange rules 604, 640, 703, 705, 707, 721, 722, 746, 748, 757, 760, (and on and on for another 10 or so).......failing to (a)keep current books and records and filing inaccurate financial reports with the Exchange from June 2003...(b)maintain required net capital at all times....(c)..provide timely notice of their net capital DEFIciencies....(blah blah)...(f) failed to maintain Special Reserve Bank Accounts for the exclusive benefit of its customers.....(g)...maintain a Brokers Blanket Bond Coverage fidelity bond.....(h) ...ensure that customer margin accounts.....adequate margin....(several more)...now a biggee (i)failure TO ENSURE THAT ALL OF ITS EMPLOYEES REGISTERED WITH THE EXCHANGE AS TRADERS HAD SUCCESSFULLY COMPLETED THE UNIFORM REGISTERED REPRESENTATIVE EXAMINATION - SERIES 7....it goes on for a few hundred more words

    "Agreed to pay $70,000 and a TEN YEAR suspension from exchange membership.....or association in any capacity with any exchange member or member organizations for each (their management team).

    I may be going out on a limb here, and I'm pretty sure that some ET naysayers will think that I'm "bashing" for bashings sake, or for some marketing purpose...but I hope that the majority of you all simply practice "Due Diligence" before tossing your career into the toilet with a non-reputable firm.

    Now all this with a Firm who "is" an exchange member and regulated...imagine how bad the guys who aren't regulated might be.

    So, just do you due diligence guys, trade wherever you want, but don't get caught up in something that can be avoided easily.

    All the best,

  2. Do I presume you are referring to a prop firm correct? I just want to make sure this isn't a futures broker since that is what I trade currently.

  3. Maverick74


    Don, I'm going to start calling you Mike Wallace. I can hear the clock ticking......:)
  4. LOL....not to worry, you managed to get on my "good side" - you're safe for the time being....

    ....and now a few minutes with Andy Rooney...

    Don :D
  5. Maverick74


    I will never speak out against the Bright Brothers mafia.
  6. ROFL, thats a good one.
  7. So is this firm being forced to shut down then? Or can it still operate for the time being? Not sure how these things work?

  8. 10 year suspension from exchange membership?

    I wonder who this is. I hope some shit like this doesn't go down with my firm some day. No way to know ahead of time.
  9. Adios immediately, all funds held, would be my guess.

    Final line says: "....10 year suspension from Exchange Membership and from employment or ..association in any capacity with ANY exchange member or member organization for each of (XYZ firm) and XXXX (Owner) and YYYY (other owner).

  10. Don, why not post the firm name? Public record, isn't it?


    And FWIW, this next info could be called "When System Trading Goes Bad"! :p

    Litigation Release No. 19773 / July 26, 2006
    Securities and Exchange Commission v. Mark R. Conway and Groundswell Partners LLC, Civil Action No. 05-12209-RWZ (D.Mass. filed November 4, 2005)
    SEC Obtains Judgment Against Massachusetts Hedge Fund Adviser
    The Securities and Exchange Commission announced today that on June 30, 2006, it obtained a default judgment against hedge fund adviser Groundswell Partners LLC, located in Waltham, Massachusetts. The Court's order permanently enjoins Groundswell Partners from future violations of the federal securities laws. The Court also ordered Groundswell Partners to pay disgorgement and prejudgment interest totaling more than $21 million.

    On November 4, 2005, the Commission obtained emergency relief, including an asset freeze, when it charged in a Complaint that Groundswell Partners and Mark R. Conway, one of its principals and its portfolio manager, defrauded investors by misleading them about the millions of dollars in losses and the trading strategy employed by the firm. In addition, the Complaint alleges that Conway altered documents to cover-up his misrepresentations.

    The Court's action on June 30, 2006 also included entering a default judgment against Groundswell Capital LP (the "Fund"), which was the fund managed by Groundswell Partners and a relief defendant in the action.

    Both Groundswell Partners and the Fund failed to appear and respond to the Commission's allegations against them resulting in entry of the default judgments.

    Additional information can be found in Litigation Release Nos. 19460 and 19473.
    #10     Oct 12, 2006