Pro Firm Threats ?

Discussion in 'Prop Firms' started by candletrader404, Aug 25, 2002.

  1. I don't understand how you can have a problem leaving a firm where you put your own money up to trade. In that case wouldn't you be a customer and not an employee? I was stuck in a contract like that but with a prop firm that was basically not fulfilling their obligations on their end. Several traders wanted out but felt trapped and did not have the money to get a lawyer. Most contracts were are only good in states where that firm has an office so some traders just moved. Others waited until the firm dissolved their prop trading and the contract was void. Some things to consider is the state you are in too. For instance most noncompete contracts don't hold up in states like CA and CO. Some states are tougher. A lot of times the contracts are written so badly that there are seveal loopholes.

    I have written about my experiences with my former firm but you have to watch out because it is a small business and you don't want to screw yourself down the road. You will be surprised where some of these people pop up down the road.
     
    #11     Aug 25, 2002
  2. Beware of any firm that makes you sign a long and lengthy contract.........Have a lawyer check it out first......
     
    #12     Aug 26, 2002
  3. I responded via PM to your note to me. There is no reason for any firm to "hold" your money, unless they "need" the money for "net capital requirements"....so, I wouldn't worry too much about it....no firm is going to risk the PR harm by keeping a traders money....and if they do, then you're right to consult an attorney.

    Don
     
    #13     Aug 26, 2002
  4. I am curious about what happens to people that go into a firm like worldco where they will let you start out without a deposit in return for them retaining your winnings into a capital account. Has anybody ever built up that capital account and then successfully taken it with them when they leave ?
     
    #14     Aug 26, 2002
  5. Turlo

    Turlo

    Alot of people get their start at a firm that does not require a financial contribution from the trader. At some firms part of the money is held in an account outside of the capital account. You can always get to your capital account but these deferred payment accounts are accessable only after a certain amount of time has elapsed. It is a way for a firm to keep you with them. It is kind of like holding a carrot in front of a donkey..

    It is not the best situation to be in but for many people it is the only way to break into the business.
    I got my start this way a few years ago. If I could do it all over again I would have save up 20k and gone to bright or one of the other firms that do not try to find ways to force their traders to stay.
     
    #15     Aug 26, 2002
  6. For example, you never know if the firm you left will merge with the firm you are with now.

    Good luck with your situation, I would suggest you speak to a lawyer and stick it to 'em. Sometimes they think you will just roll over to their threats, the best thing is to push back.

    What state are you in?

    JK
     
    #16     Aug 26, 2002

  7. And what about ruining my U-4?

    Check your PM Don, thanks for the words.
     
    #17     Aug 26, 2002
  8. If you did nothing wrong, there is very little that they can do on your U-4. They have a certain time period to submit a "U-5" (dismissal), and without "cause" there is little that they can do.

    If you did something wrong, like trying to "dually" register, or didn't have your Series 7 current, or some other blatant violation, then they can (and really must) report those violations. If you're "clean" then you should be OK.

    Good Luck...

    Don
     
    #18     Aug 26, 2002
  9. hedgez

    hedgez

    candletrader,

    if you could elaborate somewhat as to why you are being threatened some people might be able to help with suggestions.
     
    #19     Aug 26, 2002
  10. Be careful! I have been hearing about stuff like this over the last few years, there have been a lot of cases where an employee will leave a company then go to a message board and trash the company that he/she left, and gets sued by the company for damaging their reputation, even in cases where the ex-employee may be telling the truth. Law goes a lot by precedence, and the precedence is that the companies have been winning 6 to 7-figure settlements, even when people online thought they were justified and telling the truth. Don't forget that usually companies have a lot more money than you do in case the court battle rages on for years, as they mostly do.

    The problem is, even if you may be revealing the truth, if you damage an individuals reputaion damages are a lot less than if you damage a company's reputation. Think a lot about what you GAIN out of doing such a thing versus the probable downside.

    I have put a few links to some articles I could find about it, I have read about some others that I can't find, but all of them have come out badly for the individual that I have seen. There are some biggies that I have been trying to find, I am sure others saw them too when they happened.

    Also, be even more careful if you now trade for a competitor. It takes the case in a different direction when the company can claim you are doing this because you are now a competitor.

    http://www.gigalaw.com/articles/2001-all/hollander-2001-03-all.html

    "Similarly, if the offender is not necessarily an employee but instead, perhaps, a competitor, other available theories include interference with business relations."

    http://www-ec.njit.edu/~walshd/001215CYBERLAW.html

    "The case also serves as an important reminder, experts said, that the rules of libel apply online much as they do in the world of newspapers and magazines. "

    http://www.fool.com/news/foth/2000/foth000714.htm

    "Anyway, in response to the news of the lawsuit, here at Fool HQ we've received a few requests for comments on "what this all means to our First Amendment rights and the future of message board discussions." If you want to learn how this affects you, here's the three word summary: Play nice, kids."

    This next one says that any defamatory comments that appear here and are not removed by Elite could actually put them in jeapordy of being sued for negligence:

    http://www.mbendi.co.za/werksmns/net_law/guide03.htm#UStates

    "The difficulty created by defamation cases for companies such as service providers, or even companies that have a home page with a bulletin board, is that by exercising any form of responsibility or regulation of the content published on their web page or bulletin board, they risk being sued for defamation.

    If, however, they could have had the ability to regulate what was published and decide to do nothing, they could also be sued for negligence for failing to maintain some form of security procedures or editing control. Until further court decisions both in South Africa and the United States are made, the position of a service provider and companies hosting bulletin boards on their web page is an invidious one.

    Be aware that defamatory statements on the Internet, even in casual e-mails, could attract liability for defamation."


    There are dozens and dozens of cases like this. I love to read the fun stuff that gets posted just as much as the next guy, and would love to have a ringside seat to a heavyweight bout, but I myself would not rush into saying anything at all about a company no matter how justified you may feel because defending a lawsuit is an expensive enterprise. You may have noticed in some of those articles how they say that with a court order Elite and your ISP would be required to reveal who you are for purposes of a lawsuit, so anonymity doesn't spare you.

    Hope this helps your decision. If I were you I would play nice.
     
    #20     Aug 26, 2002