Exactly. They should've stepped in lot sooner to auto-liquidate the positions when they saw the huge losses amassing in the account when the trader was too chicken s*** to pull the trigger especially when they know that the leverage was high in the account. So yes, they partially contributed to this problem. They should've done more to control the margin shortfall.
How though... Assuming fat tail events happen (not even fat tail), would expect it in November, that would never hold.
I know I agree it wouldn't even hold in thin-tail events. LOL But then again he thought with thin-tail events, his deep OTM strikes won't become ITM and even if they did, his 1 long call would be able to cover his 12 shorts. LOL I just feel really bad for his clients. The minimum amount that they have to deposit with him was $500K and apparently the largest account size was $10 million and he had 290 clients. And btw, he wasn't running a hedge fund. His clients were giving him POA to trade their personal accounts on their behalf. This is why all of the clients are on the hook for all of the debit balance owed to the broker and he's off the hook.