When it's a simulated account, my guess is that agencies like the SEC and FINRA have little or no authority or jurisdiction. You may as well sign up for a subscription service that allows you to play games online. Because that's what a sim account is: It's a game. And they promise you prizes, or something, e.g., funding a live account, if you win the game. So you say you won, and they didn't deliver on their promise? Or they shut down the game and didn't give you a refund? Or that the game is somehow rigged? Or that they closed your account after falsely accusing you of cheating? That's a contractual dispute that is not governed by securities laws. The fees you pay are not brokerage commissions. It's not real trading, and there are no real securities involved. If anyone has jurisdiction, it would probably be the Federal Trade Commission or the state attorney general. Even when they fund you with a live account, you are trading with someone else's money under a contractual relationship. I'm not sure FINRA or the SEC could easily identify significant violations of securities laws. Put another way: When you sign up for these things, you are not opening a retail brokerage account. You're not opening an institutional account, either. Either you are paying a fee to play a game, or you are getting into a contractual relationship with a professional market participant. Most of the laws and regulations that protect investors are simply not applicable.
Even when they fund you with a live account, you are trading with someone else's money under a contractual relationship Ok but then how come legit Prop forms have broker dealer license like Bright Trading !
A brief review of the Bright Trading website indicates that they do not use sim accounts as a method of qualifying you. https://stocktrading.com/stepstojoin/ To trade with Bright Trading, you have to pass the SIE and Series 57 exams, and if they accept you, you become a member of the LLC. You've answered your own question. A "legit prop firm" does not charge you a fee to play around with a sim account.
Yes but what I am saying is ( to compare apples to apples) Once you are funded with these New prop firms is it not same as Bright and hence same regulations should apply .!
I see your point. But I don't think those other firms make you a member of their LLC. And they don't require you to have a securities license. So you don't have the same relationship and you don't have the same rights and obligations. But with all prop firms, if you are trading a live account, the funds are not your money, and the account is not in your name. You have been granted the privilege, or maybe the contractual right, to trade in the account. But you are not a customer of a broker-dealer. The relationship is something else. That leaves you with very limited options when something goes wrong. My guess is that your only avenue for recourse is a breach of contract claim under the applicable state law.
I take your point .. there is a thin line Hope regulators look in to it more deeply, The test fee can be construed as "First loss/ skin in the game type payment and hence same as True prop! ( unless you are employed at true prop as a salaried employee and does not have to do any capital contribution
I don't know about that! Look at what I found on google: SurgeTrader has a two-phase audition program with different audition fees for different levels: Starter: $250 Intermediate: $400 Seasoned: $700 Advanced: $1,800 Expert: $3,500