WTS - JC Trading

Discussion in 'Prop Firms' started by textrader4, Sep 21, 2011.

  1. It's best to call/email/IM them these questions, but I will do my best to answer as I do have experience with hedge funds and the brokerage industry.

    There are certain criteria that require a firm to register as a BD. These include soliciting US citizens, accepting money from US accounts/traders, having offices in the US, etc. Nevis does NO business in the US or with US citizens. Please google who has to register as a BD or call the SEC for further clarification.

    There are numerous types of firms that trade US markets that do not have to register as BDs. Offshore hedge funds, as well as domestic hedge funds do not have to. Foreign BDs without US operations do not have to register. Certain banks with trading operations do not have to.

    There is definitely a clearing firm that clears their trades. Whether they have an account directly with a clearing firm of through a BD (like Goldman Sachs or Merrill Lynch, or a foreign BD) I am not sure. Again, easiest thing to do is pick up the phone and call them.
    #41     Sep 25, 2011
  2. Don't hedge funds need accredited investors (million dollar net worth or 200k a year or something along those lines)? Nevis isn't a bank, nor a hedge fund. It is an offshore LLC and that is it.

    I agree with you that there isn't a mystery on Nevis - you know what you are getting. What the mystery is how JC is related to it and how it is posted on their U-4 with WTS and how they get conpensated.

    (I assure you no hedge funds, off shore or on shore - take $5,000 from random people they've never met to facilitate their trading and make money off their commissions. Name one 'hedge fund' that that exists at. There are none because it is called a broker dealer, not a hedge fund.

    As far as I know, the definition of a broker dealer - or at least one thing that makes you broker dealer, is transaction based compensation. Look on www.sec.gov/divisions/marketreg/bdguide.htm at SEC.gov and click on the links about what makes an entity a broker or a dealer.

    It doesn't say anything on there about exceptions for LLCs in the Caymans or Nevis, unless they are foreign BDs, which Nevis Trading LLC is not. So I think they're just trying to fly under the radar, which doesn't make it legal or a place to do go unless there aren't other options.

    Again, I haven't professed to be an offshore, non-US effort, but the US stuff I know my stuff on.

    #42     Sep 25, 2011

  3. I'll state my motive outright. Recently, the proliferation of WTS sub-groups has scared me into thinking that people's money isn't safe and that something doesn't smell right. I may be wrong, and I am not making accusations, I am just suggesting good questions to ask before putting your money into this thing. (I've seen this before. Tuco had 7 or 8 sub groups, including Title, T3, JC, SMB and more all trading through it before the SEC shut it down. Madoff had tons of feeders dragging money in the door while he hid in his office.) So this mushrooming operation, along with the due diligence I did on the balance sheet has scared me into being skeptical. I think it is fair to bring all this stuff up as people ask about WTS and JC. In fairness to me, I didn't start the threads, I'm just giving information out which I think would help.

    Overall, all I have done is suggest due diligence. I actually did a chunk of math on the other thread showing that WTS traders averaged $4600 per year in Gross PNL. Or, take the best 50 out of 400 WTS traders, as someone else suggested, and assume the rest made nothing or lost money, the math came out to $45,000 per year.

    Doesn't this alone worry you? The best 50 traders at WTS averaged less than $50,000 per year pnl before the firm's cut.

    As far as JC, they part of Tuco Trading when Tuco got shut down. That is publicly available information if you look at the Tuco Trading bankruptcy and SEC court documents available online (or ask them). So if they were willing to trade with that outfit without them doing their due diligence on the legalities, why should you blindly trust them? Why don't they announce it on their website, proudly, or form their own broker dealer to ensure that doesn't happen again. (BTW, Nevis was formed just after Tuco Trading was busted by the SEC, I suspect to facilitate foreign business which no one would touch after.)

    Just flags, not deal breakers. But ask the questions because you need to consider they looking out for you or just looking for the cheapest deal for themselves? (By 'JC U4s' I meant what it said on the owners of JC's individual U4s obviously, and the questions about how they get compensated were not from WTS, but with their relationship 'consulting' for Nevis.)

    And Genesis did not shut down voluntarily. They are / were getting fined up the ying yang and if they stayed in business they would not only have to pony up for that, FINRA was going to require them to hire a ton of additional operations and compliance people to implement measures against what they didn't like, so they were forced out of business for sloppiness on the foreign trading stuff as far as I know.

    Regarding WTS (US ONLY HERE - don't know anything about overseas), I simply want answers to the compliance and financial questions to be satisfied. Otherwise it looks to me like they may be having as many other people (capital traders group, the guy who runs LES Trading from his apartment, JC Trading, Principal Trading Group, and I think more but can't think off hand) drag in as many newbies as possible to get capital to operate the business.

    If I knew how much money was Class B traders and Sub Groups versus Class A (the WTS owners money) or the ratio, then it would almost be enough. Won't you be worried if they have 3.5 million in Class B money and 500k in Class A money? Then you just have the compliance questions of how they essentially have brokers - like Capital Traders Group - running offshore operations as well. And if they are breaking advertising rules by putting up websites which say ' traders trade through a CBSX broker dealer' but don't say which one.

    So still - Regarding WTS:

    1) do they have any decent traders? (necessary to maintain a firm's operations - meaning it will close if all the traders stink, lose money, then they go thru what the A members are willing to lose and dip into the Class B members capital). FYI - this has happened twice with Broker Dealers in the past year. 1) Lighthouse 2) Madison Trading, which was in business for at least 5 or 6 years before shutting down 3 months ago and is paying their traders and groups a % of their capital deposits instead of making them whole. (And those owners are rich as hell.)

    2) What is the Class A ratio to Class B ratio at parent company? If you have at least 4 subgroups, how much of the 4 million of 'member's equity' is from the subgroups, how much is the traders and how much is the owners??????????

    You have your money in there - aren't you curious?

    Not getting these issues shoved under the rug are my motive, and to this point, no one has responded to the financial questions at all. I've I now asked many times.
    #43     Sep 25, 2011
  4. SgtSlotter,

    T3 Trading was set up as a hedge fund for years before they switched to a CBSX BD. They hired you as a trader for their fund. Nevis uses a similar approach where you are hired as an independent contractor to trade the firms capital.

    The numbers you quote for accredited investors is an SEC rule for US investors (http://en.wikipedia.org/wiki/Accredited_investor).

    The link you posted about what is a BD is exactly correct. But you need to dig deeper to find exemptions...so you are wrong when you say there isn't an exception for foreign firms. Please note:

    "The SEC generally uses a territorial approach in applying registration requirements to the international operations of broker-dealers. Under this approach, all broker-dealers physically operating within the United States that induce or attempt to induce securities transactions must register with the SEC, even if their activities are directed only to foreign investors outside of the United States. In addition, foreign broker-dealers that, from outside of the United States, induce or attempt to induce securities transactions by any person in the United States, or that use the means or instrumentalities of interstate commerce of the United States for this purpose, also must register. This includes the use of the internet to offer securities, solicit securities transactions, or advertise investment services to U.S. persons. See Securities Exchange Act Release No. 39779 (March 23, 1998) http://www.sec.gov/rules/interp/33-7516.htm. Foreign broker-dealers that limit their activities to those permitted under Rule 15a-6 of the Act, however, may be exempt from U.S. broker-dealer registration."

    When you say how Nevis is related to JC's U4 I am sure you mean the principals of JC since a firm cannot fill out a U4. I have no knowledge of this but I would assume that they simply put it down as an outside business activity. Why is that a mystery? I can be a trader or branch manager at WTS and still work in other areas. For example one CBSX trader I know also has a successful Registered Investment Advisory business and is dually registered as a Series 7 RIA with another BD. Is that a huge mystery? He simply put it down as an outside business activity and and compliance needs to sign off on it. No big deal. If the principals of JC put down that they do consulting for an offshore fund is that a huge mystery?

    Lastly, let me use an analogy for JC and WTS. Are you familiar with LPL Financial? They probably have more offices in the US than any other BD. But you cannot open an account with them. You need to go through one of their 12,000 financial advisers. However, these advisers don't have LPL on their office door, instead they have something like "Smith and Jones Financial". But when you open an account with Smith and Jones Financial you are really opening an account with LPL. No mystery....you sign LPL paperwork and LPL holds your money. This is very similar to how WTS works.

    I know I have a lot of posts in this thread defending JC and Nevis. But I have a motive that I openly disclose....I have traded with them for years and know them as stand up guys. I also have been in the industry a while and know a thing or two about some of the regulations. I'm still trying to figure out your motives to sign up on elitetrader three weeks ago and devote all your time in 3 different threads to bash them and attempt to discredit them.... especially when you don't have all your facts correct.

    #44     Sep 25, 2011
  5. I said there is no mystery on Nevis Trading. But it doesn't fit this exemption. If they are an entity making money on your trades, it should be a broker dealer. According to the regs you site, they should be a broker dealer in Nevis regulatory jurisdiction, not the US, but they aren't exempt from all oversight.

    I really don't care about Nevis. If you are comfortable because of JC's good service even though they deal with a Nevis company with a Canadian phone # and US internet suffix (and google their address in Nevis - you'll love some of the other companies that get their mail at that address too - I think www.pillmed .com or something like that is one of them), then go for it. And yes, WTS compliance approving it makes it better, but WTS's compliance officer, up til this coming end of October, could have been a 19 year old kid with no license or experience. There were no licenses, exams, experience, or prerequisites required! So I sure wouldn't rely on him or her if you want to make sure your money is safe. (Full disclosure - I don't who their compliance officer is. It could be someone with experience and who knows their stuff for all I know). With the licensing rules coming in, Chief Compliance Officers need real exams 24 and 14, so we'll see if they change their opinion on people's outside business.

    Again, your call on this one. Maybe you are right about these guys, I hope so. But overall I feel bad for you because you basically blindly believe that these guys are doing what is right for you, not keeping their business's best interests at heart, because they are nice to you and they answer the phone on the first ring. I sincerely hope that is the case and you may not be wrong on this one, but you are going to get burned in life not looking into things, especially when it regards to parting with your money (or endorsing it essentially) to people who are never even going to, most likely, see or physically meet in person anyone who works for JC Trading.

    It is fine to endorse them, but I consider this pretty thin stuff. I would require some hard core answers on the capital issues, capital structure, mostly in reference to WTS since apparently that is who your money, not JC, is being sent to (although at the beginning of this thread people thought JC traded through Oceanview).

    My opinion, and I understand you are entitled to a different one, is that people should be doing more due diligence because they are a sub-group and not an actual broker dealer, not less.


    1) WTS has at least 3 other 'front' websites which popped up in the last year which don't admit they trade through WTS on their websites. At least one is a guy in his apartment.

    2) JC traded through Tuco, then through Oceanview, now through WTS apparently, although they don't say that anywhere on their website. In 4 years, this is the 3rd company they operate through.

    Not a fact, but my point:

    1) There are many financial and compliance questions no one answers about WTS (US OPERATION).

    I'm still open to hearing about the viability of WTS and the questions regarding if there are actually real traders there.

    By the way, I'd post on other stuff too, but people keep starting threads about these subs and WTS and it is a lot more interesting to me than anything else on here to this point. Trying to help on other stuff too.

    #45     Sep 26, 2011
  6. Sgt. Slottter

    first of all let me say I was a big fan of Sgt. Slaughter of wwf fame growing up but I am not a fan of you.

    you clearly have some agenda against some of these firms and my guess you are either a competitor or a former trader who couldn't cut it. Listen. We are all adults here and don't need you to "save" us. Go away and go protest the environment or something. In trading and business everyone is in charge of their own due dillegence and if they don't do enough then they get burned. That is life. Seriously, please go away. I have read your posts on other threads and you do nothing but bitch and complain. You sound like a real dick.
    #46     Sep 27, 2011
  7. Sgt. Slottter. You might be the worst poster on this forum. All I see is a competitor of WTS or a former trader who couldn't make it with an ax to grind.

    We don't need you to "save" us. Go away. Anyone who doesn't do their due dillegence will pay the price in the end. We are all adults. Let the market weed out the bad firms and the bad traders. Seriously, please go away.
    #47     Sep 27, 2011
  8. People who have something to hide say the words "go away" often. I noticed.
    #48     Sep 27, 2011
  9. thats very healthy. diversion of opinions is.
    #49     Sep 27, 2011
  10. Tranbo


    These prop firms lack of transparency. I applauded sgt slotter for his due dilligent. If they dispute his finding then come out and show thiers hands. Just don't tell him to go away or removing the post--I find it very informative.
    #50     Sep 27, 2011