Warning to anyone trading through an LLC

Discussion in 'Prop Firms' started by t0pd0g, Mar 4, 2010.

  1. t0pd0g


    The SEC shut down another Tuco. The traders in this one I don't think lost their money but I'm still investigating this. Read the SEC notice and ask yourself if you are trading in this structure. It seems like a few firms that are mentioned on ET are this structure and can be shut down any time:

  2. austintx1


    Warrior Fund was not a Tuco. The principal of Warrior Fund decided to get all of his traders licensed at the broker dealer he was doing business at. Warrior Fund traders did not lose their capital because of the SEC nor was the entity seized unlike Tuco. The Warrior Fund always has conducted itself in a professional manner which is why the office is still there and has a lot of traders around me.
  3. riddler


    "warrior trading"..why such an unprofessional name? could you imagine a 40 year old being asked what firm he works for and says Warrior trading!
  4. I can't believe this isn't getting more responses. Isn't this the same LLC structure that Cy Group uses? What other firms trade in this type of structure that traders need to worry about?
  5. I wish the SEC would stay the hell out of everyone's business. All this regulation is killing the average retail traders. I don't appreciate anyone telling me how I can use my own money. The SEC, CFTC, and NFA are a joke! I believe there needs to be regulatory bodies to oversee the financial markets to make sure they are operated in a fair manner. People like Madoff and insider trading should be taken care of accordingly but to tell a trader what he/she can do with their money is taking it to far. If I want to daytrade stocks with $5k I should be able to do it, If I want to trade forex using 400:1 leverage, I should be able to do it. The NFA just implemented a new rule in forex which only allows a 100:1 maximum leverage at U.S. brokers but now the CFTC is trying to implement a maximum of 10:1 leverage. Daytrading margins at futures brokerages equal leverage greater than 100:1 and they are not being challenged.

    When will all of this regulation stop? The SEC now wants to enact the uptick rule in certain circumstances. It won't be long and retail trading will be out the door and many full time traders will be without a job. As of now U.S. residents can seek overseas accounts and get around the NFA, SEC, and CFTC rules but I'd be willing to bet it won't be long and U.S. residents won't be able to open overseas accounts. I am fed up with all of this BS regulation and how they try to make it sound like they are "protecting" the retail trader. If they want to protect us then leave us the eff alone and let the free markets work the way they are supposed to, not with government intervention.
  6. oh really?
    giving total freedom to people is really the best thing? What makes you think that while most Americans acted irresponsibly with their credit cards, auto loans, home equity loans and above all , mortgages, that they will suddenly act in a prudent manner with their trading leverage and margin accounts? You may still not have gotten the message but the government and regulators are not interested in how you inflict damage on yourself BUT OTHERS. After all this whole mess is, contra to popular American lefty belief, NOT financed by the American tax payer but mostly by foreigners and large US funds through the issuance and sale of government bonds (I keep the US dollar issue out of the equation and limit myself to the issuance of fixed income instruments). So believe me, I and a lot of bystanders have a VESTED INTEREST in you not doing something stupid because in aggregate you may harm my investment. After all I am happy to have watchdogs to keep the total renegades at a tight leash. And please do not criticize all those bond holders for holding stupid investments, as a) its your mess they are financing, b) a lot of guys got burned last year attempting to short treasuries, bonds wont sell off until Fed will finally start hiking which is a big question as we may as well see a double dip if not worse going forward or do you REALLY think anything has been cleaned up so far? Also inflation is so far completely absent.

    Maybe you could also take a lesson away from this here or there: What about trading at a prudent leverage and margin level that wont guarantee a blowup for sure sooner or later in the future?

    (Note: I wrote this in a little cynical manner but overall I stand by my points)

    P.S.: Oh, and in case you dumb ass still did not get it: THIS IS NOT TO PROTECT YOU , ITS TO PROTECT ALL THE OTHERS ON WHICH YOU INFLICT DAMAGE!!! Really so hard to get? ......Seriously: You are totally contradicting yourself: On one side you are one of those who is cursing Wall Street and all its evil bankers who abused leverage and which had to be bailed out by UNRELATED PARTIES, and now you walk here and scream about someone wanting to limit your crazy leveraged trading style? Give me a break.

  7. telozo


    There is something fundamentally wrong in your response. You say regulation should prevent some people using their money in a way that would harm other parties involved in the same investment. But who would assume the risk on the other side of your investment, so you can collect the premium. If everyone behaves in a rational manner, there would be no risk, and no premium to collect.
    By the way, foreign bond holders are not holding them out of charity, but for profit, and profit comes from assumed risk.
    I think you got your argument wrong. You were much better as a GS cheerleader.

    :D :D :D :D :D :D :D :D :D

  8. Your comparing apples to oranges! My so called crazy leveraged trading style doesn't directly or indirectly take advantage of inflict damage to anyone but myself. I am not cursing wall st bankers, in fact I think they should leave Goldman the hell alone to, they have been used as a scapegoat for the piss poor government regulation and programs for the poor that got us into this mess, yeah, that's right, Clinton's Community Redevelopment Act allowed anyone with a heartbeat to get a loan regardless of credit history. So please don't accuse me of being contradicting because that is the exact opposite of what the intentions of my post was. Anything the gov't touches or has its hands in is a complete screw up, if you want examples take a look at Social Security and our wonderful education system. Enough said!
  9. I think its you who does not really comprehend how financial markets ought to function. People get rewarded for the amount of risk they assume. The payoff may be larger for more risk, taken, but it may also result in a larger loss. This is as far as theory goes. Practically, we need to go a step further: If there is a chance that the actual risk taker does not assume all the risk but that other, unrelated parties get harmed, then something needs to be done. That is exactly the original idea of regulation and how it generally works. If regulators do not care that some hedge funds collaborate to drive down a whole currency or companies in a concerted effort then that harms a lot of unrelated people and this has nothing anymore to do with sound economic principles. The same applies to our Mr. Always-Overhedged: If he sells calls and the next morning the company he traded is taken over and the stock surges 30% then he is forced to pay up. What if he does not have the funds to cover the loss? Declare personal bankruptcy? Sure, but thats only one part. Who covered the rest? The brokerage, other brokerage customers, an insurance policy held by the brokerage, society at large?

    Markets are not efficient nor do people behave rational. I and nobody would care whether dudes with 100:1 leverage kill themselves BUT I and others do care when others get hurt. And government investors get rewarded for the risk of a AAA rated government fixed income product not a subprime mortgage loan or CDS contract. When money raised through the issuance of US treasury bonds is used to prop up a dead beat economy and especially dead beat companies then Chinese and Japanese and German investors have EVERY RIGHT to start asking questions. I thought that was pretty clear to most, apparently not so...

  10. zdreg


    what is the relationship to manning?

    #10     Mar 7, 2010