There was no capital shortfall at Tuco, no missing money. It was stuff like a group taking a payout of their profits at the end of the month and the account used to make the payment showed the debit, but the sec accountants wouldn't recognize the offsetting equity in the trader's sub accounts, so they counted it as 'missing money'. Or ecn's that owe the firm credits, but pay a month after the fact. Tuco had excess capital when the sec stepped in, more than enough to pay all the traders all of their money. The way the sec handled things though, making the company pay for all the sec's expenses and the disgusting money grab of the court appointed receiver, we hope we'll get it all back. If we don't get every dime back, well, I guess that's the cost of having the government 'protect' us. Exactly the same as having the Corleone family protect your business.
I know thats the line that tuco management is feeding out to, but have you actually seen the bank statements proving that the money is there? Otherwise, I'd tend to believe the SEC.
no offense lescor but of course you'll defend the people you worked under for many years.i'd say the forensic accountant knows a bit more than you. nobody's accusing them of out right theft but at the least there books were lax as the sec says. THE QUESTION TO YOU LESCOR IS WHY DID THE SEC PICK ON TUCO AND NOBODY ELSE?WHY DID MIKE KESTLER NOT OWN TUCO AND WHY WOULD HE BASICALLY GIVE OWNERSHIP OF HIS COMPANY (EVO TRADING) TO DOUG FREDRICK? also no doubt tuco knew the sec was investigating them yet they continued recruiting. lescor did you know the sec was investigating tuco before the formal charges? and lastly surely before charges were brought against tuco they had the opportunity to explain there position. HOW THE HELL DO YOU HAVE 290 TRADERS AND ONLY HAVE THE TRADERS DEPOSITS IN THERE ACCOUNTS? 10 MIL OF DEPOSITS IS ONLY 40 MIL BUYING POWER YET YOU'VE SAID YOU HAVE 70 MIL BUYING POWER ON OPENS ALONE. AND THEY USED AN OUTSIDE SOURCE FOR MARGIN CALLS WEEKLY. it all smells funny
i saw the accounting statements. anyone can actually, it's on pacer. basically, what corey said is how it is. they had around 7-8M in cash accounts plus 3-4M in ECN receivables. the "forensic" accts and lawyers are in a very huge conflict of interest situation, which any logicaly amoral and ambitious individual would exploit. so, you really have to take what these guys are saying with that in mind. remember, this isn't in sec hands anymore guys, this is in the hands of a private law firm and his hired accts, acting as "receiver"... sec has already washed their hands of this. monstercat, you've been putting a negatvie spin on this tuco thing since the beginning. but honestly, i think it just stems more from your ignorance and maybe personal need for drama than any true maliciousness so i'll try and answer to some of your confusion: tuco was run by doug, mike, and previously a 3rd guy john who parted ways last year. doug was always an owner so this wasn't a new thing. why mike wasn't listed as class a member, i don't know, but i can't think of any sinister reasons why only doug got hit for this. they might have heard that they could be a target and structured it like that to limit the damage if and when it came, but that's really speculation and i don't think anyone will ever know that for a fact. does that mean they're criminal and fraudster's if true? no, it means they're smart and i'd be hard pressed not to have done the same. lescor obviously didn't know that it was coming or he would've obvioulsy pulled his money, don't you think? re: his 70M bp... this very OBVIOUSLY is not his positional leverage, but the amt of limits they allowed him to float. if you know how opg's work, you have to put out tons of limits of which only a fraction get filled on. mav74 has tons of posts on here explaining how the trick of running a small prop firm is the balancing act of allocating > leverage than you have firm wide, betting that all traders aren't going to be using their full amts at the same time... when they do though, you get a margin call. nothing smells about that, just part of the business model, and would only be an issue if they didn't have a capital source they could draw on to meet the call. which, of course, they obviously had, as it would be hard to keep traders if you were shut down every other day by your clearing firm. anyway, you've got guys on here providing facts based on talking to firm owners, personal experience, and looking at legal documents/accts, and then you've got guys making a lot of assumptions based on very little knowledge of the situation, cursory reading of sec complaints or biased articles, and really, very little knowledge of how the prop biz runs in general. to the latter, don't make assumptions until you've done ALL your homework (reading sec complaints and court orders will be graded as "incomplete").
No, I haven't inspected the company's books. Yes, I am basing my information on what I've heard first hand from Mike Kestler and Doug Frederick. I've known them both for several years, have stayed at their houses and condsider them friends. I have no reason to doubt what I've heard from them, but yes, it's possible I am being lied to, I just personally chose to believe what I've heard to this point. Why did the sec pick on Tuco? Well, the sec does not actively seek out prop firms to investigate. They will only act when a complaint is filed with them and they are compelled to do so. So, someone complained about Tuco in some manner to the sec. They don't know where that came from, it could have been a pissed off former trader, or a disgruntled business associate with an ax to grind. Keep in mind that Tuco was structured and operated in exactly the same manner as most non broker dealer prop firms do. The sec has known about this kind of operation all along and has let the firms be except when someone calls on them to investigate something. To my knowledge, the sec has not issued a formal opinion on these firms. Bob Green has written in the past they they are operating in some kind of regulatory grey zone. Joe Blow Trading LLC where you put up $10,000 and get 20:1 leverage with no licensing required has been very common for several years now. Are these firms breaking the law? The sec's stance on the Tuco situation makes it sound like any non registered broker dealer offering more than 4:1 and allowing daytrading in less than $25,000 accounts is. Yet there have been and continue to be probably more than 100 of these firms in existance and the sec has known about it all along. My point is that Tuco was operating in a typical manner. The sec was required to investigate and they applied the letter of the law, simple as that. There was no criminal intent or fraudulent activity. If you want to bring down an entire firm, it's a simple anonymous phone call away. As to your other questions, I do not know why the ownership of the firm was structured as it was. It's not my business and I never inquired. I didn't know of the investigation prior to the charges. I was a trader like everyone else, so why would I? It was business as usual until the day they were shut down. I pulled $100k out of my account just days before assets were frozen. If there was money issues, I would think there would be efforts to hold on to cash. I had over $100M in buying power, but that's not what I used for positions. I submit thousands of orders at a time, a tiny fraction of which are ever filled. 5 or 6 million on at a time is a lot and I am sure I was by far the biggest user of firm capital. All these firms (if they are smart) already have outside financing arrangements in place if they get margin calls. Tuco did regularly, it was part of their business plan and a regular, normal course of their business.
tuco traders should get together and hire a lawyer to sue the receiver..........make him release the funds immediately.........or at least threaten him with a lawsuit if he tries to skim some of th money for himself.......it'll be interesting to see how much they get back.
It's in the court papers. You cannot sue anyone. Once the consent decree was signed, that was it. End of story. The receiver has all the authority now and everything is pretty much upto him and his lawyers that represent him. Whatever he recommends to the court you can guarantee will be accepted. Everyone knows him and his legal team will milk this for some time. Sure they may hand out a small distribution to investors but the rest and final disbursement(s) will take some time. Probably late fall until everything is cleared up. He already received an extension until October to file the taxes for Tuco. The court papers said his accounting report is due by the end of May. Hopefully, that will stay the same.
didn't tuco agree not to challange anything? if i were tuco and innocent all i can say is i'd pt the finger at the 100's of other firms doing it. but to lescors statement there is massive movement going on at most other firms as we speak. assent is not allowing any non licensed llcs anymore and i know a few lightspeed llcs have changed and i know genesis is making llc's change there structure. wethere they've been contacted are not by the sec i don't know. i think some firms will license there llc's overseas and keep there foreign traders at the very least or restructure there whole setup. lescor were are you trading now?
The line that is being fed by the previous owners of Tuco (I had talked to Mike Kestler immediately after the SEC action) is that the reason why they were closed down was because of the way Tuco was "structured." This is a very misleading statement. The reason why Tuco was shut down was because it was operating as an UNREGISTERED broker/dealer. UNREGISTERED means that they are not subject to any type of oversight - not with the SEC or any SRO. This is what prompted the SEC to take action. Electronic day trading firms as we know it have existed for more than 10 years, and we have witnessed firms which have ceased operations because of mergers (Van Buren/Echo or Generic/RBC) or mismanagement (anyone remember Block Trading?), but it is only with Tuco Trading that the SEC took action against. This shows that the SEC is not in the business of shutting down trading firms arbitrarily, but rather they shut down a firm only if it is breaking the rules. And since you yourself admitted that you did not examine Tuco's books yourself, it would serve you well if you would refrain from making statements like "there was no capital shortfall at Tuco, no missing money" or "Tuco had excess capital when the sec stepped in, more than enough to pay all the traders all of their money". These statements are being challenged by the receiver, and between Doug Frederick and the receiver, I would say that the receiver would be the more unbiased entity. At this point, he is accountable to the court and to Tuco accountholders if he screws up; Mike Kestler and Doug Frederick have already screwed up and are not anymore accountable to anyone since they have already reached an agreement with the SEC and the court. I know that you were once Tuco's remote manager, but please stop spinning for a firm that is no longer in existence. At least show some respect for the Tuco accountholders who had decided to sign up with the firm based partly on your glowing reviews about Tuco here on ET and who are now left holding the bag.
Nice response tito. lescor's(corey) here defending a firm that god knows how many he recruited from et. I'm just wondering corey if you've reimbursed all those poor 5k pikers you sucked in by posting your p@l?Hell you make 100k a month so why not make them all whole? You led them to your friends compnay(tuco) so don't you feel responsible? And what timing after you put a glowing review of tuco on et they fold.I commend you for showing your face on this board defending tuco after you've got egg splattered on it.