A Chinese Firm Cost Interactive Brokers Millions

Rickshaw Man

Rickshaw Man

In late February, Interactive Brokers Group Inc. revealed in a lengthy regulatory filing that it might lose as much as $59 million from loans it made that were backed by essentially worthless collateral.

One thing it left out was the exact nature of the collateral. The answer, it turns out, is shares of an obscure Chinese company with years of losses, no revenue and a U.S. headquarters located in a New York City apartment.

https://www.bloomberg.com/news/arti...-is-said-to-cost-interactive-brokers-millions
 
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Reverse mergers usually don't have the scrutiny of a fresh IPO which is why they attract skunks but they are a less expensive way to go for legit projects also. If a firm is going to be on the hook for millions in exposure, some reasonable due diligence on the reality of the balance sheet would be called for.
 
I heard about this one before, funny that it turns out to be a China scam.

I imagine the $42 million loss figure will fall dramatically, since the hapless IBKR customers are ultimately on the hook.
 
So that is what that bad debt expense was for. https://www.elitetrader.com/et/threads/ib-42m-bad-debt-expense-which-stock.331760/. People were thinking it was biotech. It turns out it was Chinese scam companies. Well I blame IB on this one. Chinese scam companies is nothing new anymore. There is a documentary made about it on NetFlix. It started back in the late 90's, it's been almost 20 years of scamming in the making. There are at least about 5 research companies dedicated to exposing scam companies from China that use reverse mergers (Trump is correct on this one to ban taking over of US companies by China in the tech sectors. Maybe he should ban taking over of US companies by China in all sectors. That would really be something that would protect the US investing public). IB, being a brokerage company itself should know better and do better due diligence. It imposes 50% margins and worst-case scenario of 30% adverse movement to forbid trading in VIX securities and yet it extends margins for a stock that has years of losses, no revenues and with a US headquarter address of a Manhattan apartment??! Really? They almost deserve to have the losses. What a joke. And btw, its trading commission is not low anymore. The article states that discount brokerage is struggling to make up lost revenues from low trading cost. And that's not true anymore. IB's trading commission might be a tad, just a tad lower in options, but its commissions in stocks is not competitive; it's a lot higher than what I am getting in TOS.
 
JSOP said:
So that is what that bad debt expense was for. https://www.elitetrader.com/et/threads/ib-42m-bad-debt-expense-which-stock.331760/. People were thinking it was biotech. It turns out it was Chinese scam companies. Well I blame IB on this one. Chinese scam companies is nothing new anymore. There is a documentary made about it on NetFlix. It started back in the late 90's, it's been almost 20 years of scamming in the making. There are at least about 5 research companies dedicated to exposing scam companies from China that use reverse mergers (Trump is correct on this one to ban taking over of US companies by China in the tech sectors. Maybe he should ban taking over of US companies by China in all sectors. That would really be something that would protect the US investing public). IB, being a brokerage company itself should know better and do better due diligence. It imposes 50% margins and worst-case scenario of 30% adverse movement to forbid trading in VIX securities and yet it extends margins for a stock that has years of losses, no revenues and with a US headquarter address of a Manhattan apartment??! Really? They almost deserve to have the losses. What a joke. And btw, its trading commission is not low anymore. The article states that discount brokerage is struggling to make up lost revenues from low trading cost. And that's not true anymore. IB's trading commission might be a tad, just a tad lower in options, but its commissions in stocks is not competitive; it's a lot higher than what I am getting in TOS.
More...

Why is IB's stock commissions not competitive? Only free RobinHood is cheaper but RobinHood is known to have poorer price execution. TOS stock commission is flat fee at USD6.95. This is competitive only when you are penny stock trader which most of us aren't. IB is still the most competitive for stock commissions.

https://www.stockbrokers.com/compare/interactivebrokers-vs-tdameritrade
 
helpme_please said:
Why is IB's stock commissions not competitive? Only free RobinHood is cheaper but RobinHood is known to have poorer price execution. TOS stock commission is flat fee at USD6.95. This is competitive only when you are penny stock trader which most of us aren't. IB is still the most competitive for stock commissions.

https://www.stockbrokers.com/compare/interactivebrokers-vs-tdameritrade
More...

If you trade 1000 shares, for example, of stocks at IB, IB will either charge you up to several hundred $'s of commissions whether it's on fixed or tiered basis. At TOS, that same 1000 shares of stocks will cost you only $6.95. So how is IB's commission still cheaper?
 
JSOP said:
If you trade 1000 shares, for example, of stocks at IB, IB will either charge you up to several hundred $'s of commissions whether it's on fixed or tiered basis. At TOS, that same 1000 shares of stocks will cost you only $6.95. So how is IB's commission still cheaper?
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From IB website

100 Shares @ USD 25 Share Price = USD 1.00
1,000 Shares @ USD 25 Share Price = USD 5.00
1,000 Shares @ USD 0.25 Share Price = USD 2.50

Where are you getting several hundred dollars from? Cheaper than TOS.
 
JSOP said:
If you trade 1000 shares, for example, of stocks at IB, IB will either charge you up to several hundred $'s of commissions whether it's on fixed or tiered basis. At TOS, that same 1000 shares of stocks will cost you only $6.95. So how is IB's commission still cheaper?
More...

IB is expensive for trading penny stocks but not as expensive as you described.
 
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