So I am hearing that some firms may be frauds, and others are not registered brokers..... Can someone please explain the risk involved here? Can the company just shut down and take your money? Or must they return your deposit? For instance, I like most of what I see over at Cy Trading, but they aren't registered...
The best is to conduct due diligence on the firm you wish to trade with, and keep all correspondence in writing. CBOE firms keep your capital contribution for one year (as per SEC). FINRA firms may or may not hold your capital for a full year, as they are usually better capitalized. Yes, there ARE frauds out there where the owners misappropriate the funds. Usually, it's when the firm is not a registered broker. However, any firm can commit fraud if the owner is shady, regardless if they are SEC registered or not. Whichever firm you choose, my advice is to conduct your own research in addition to whatever you see and read on a post, and you can always check the SEC.gov and FINRA.org sites. Hope that's a start. Good luck.
Next Level Trading partners closed up the office one Friday...and the following Monday, they never came back. Neither did the millions of dollars traders deposited with them. Just ask Dimension Capital
Gcapman, Good point. Also, Team Trading abruptly closed shop in late March 2010, with funds owed of ONE MILLION DOLLARS (or perhaps more) to independent traders, plus the employees and vendors who did not get paid. Anyone who steals money from others will eventually pay the price somewhere down the road, if you believe in Karma, which I do.
These guys definitely have balls. 2/3 of them had kids and lots of friends in the city. All I can say is that if they try some shit like this in China, at least they have the death penalty.
take a look what happened to Warrior Fund, LLC. and this is not the only action, you can see all the administrative proceedings on the SEC.gov site. do your research, and you'll avoid a lot of hassle down the road. http://www.sec.gov/litigation/admin/2010/34-61625.pdf
My experience at Dimension was quite surreal, actually. Watching a stream of new recruits poached off of craigslist on a daily basis, promised one thing and when in the office told another, and that thing was most often for them to deposit funds before any paperwork was processed or accounts activated, and was my experience and witness to watching management directing said funds to cover operating expenses for not generating sufficient revenue from traders, or profitable on an operating basis, or sufficiently capitalised within the LLC (just review their SEC filings), to be able to pay their bills. But that was just me. I could be wrong. But probably not.
This is all very confusing to say the least. There should be some institution working full time on regulating these firms. In most cases it is wrong to steal some traders money. I have read that most of the regulated firms form part of the CBOE. The CBSX, FINRA and other terms should be studied. But for a trader to say he is completly lost after funding an account seems wrong. There Should be some institution like the SEC working on avoiding this.
yes, they should, but they're not. they're called lawyers. and you hire them to sue the fuck out a company when they breach their contracts, or "bait-and-switch" from what they promised to what they actually do, or if their servers go down and your trades get blasted to hell, or you get stopped out on a quoting error, or the fills are delayed because they are trading against your positions on a centralised server before they get routed to the ecn, or by delaying your orders to stop you out on a larger position...all kinds of reputable, commendable, respectable shit like that. you file suit, you take them to court, and you rip the firm apart limb from limb until your money bleeds out back into your pocket, and your legal fees are paid. BUT before you worry about having to do that, you get everything in writing, or record it on your iphone sitting in your pocket, when they refuse to answer it in emails that are automatically archived for sec review. in short, no firm you meet with, no manager, no principal, no trader, their word's mean nothing unless it's backed up in writing and signed and witnessed. thus, why most account agreements are 80 pages thick. they'll cover their asses, while fucking yours in the process. case in point: dimension. let me tell you what the "managing" partner (and this guy is probably reading this and cursing me to allah) told me when i asked why he wouldn't sign an addendum relieving me of additional liability for other traders i referred to the firm, or were assigned to me by the firm to train on behalf of the firm (and i am paraphrasing): "well, you're not like most guys we get in here. you're the only one that's ever actually read our sec filings before signing their contract. and most guys don't threaten to sue or file complaints with the sec when there are problems. most guys, well, um...get fucked over and leave." confusing indeed.