Does this protect traders?

Quote from mc312:

Demonize? No, just pointing out a sales pitch when I see one. If you weren't repeatedly acting like a used boat salesman, you wouldn't get treated like one.

By the way, what about Bright's financial statements Don? Where are they? I looked on your Web site for them but I couldn't find them. Why don't you post them there for the whole world to see? Other companies do this. Assent, for example, has its financial statements right on its Web site.

Another thing, how realistic is it for anyone to ask any privately held company to release its financial statements? Don't most companies have very good reasons not to let their competitors obtain easy access to details of their inner workings? The companies that I do know of that release this information are required to by regulatory organizations.
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Pretty realistic I guess, since we're privately held. Assent is a division of a publicly traded company, so they have to post financials. We share with our traders when they are ready to register. I have sent them to several here on ET.

I'm sorry that it appears like a "sales pitch" - if that's all it is, then it must be working really well (I'm just being silly, I don't take myself too seriously here on ET, LOL). I just answer questions for the most part, or do my best to correct the record when needed.

I openly say who I am, I answer a lot of questions, get a lot of good stuff for the magazine, and it seems that the majority of readers are fine with all that. I'm sorry if that bothers you, seriously.

All the best,

Don
 
Quote from Don Bright:

Pretty realistic I guess, since we're privately held. Assent is a division of a publicly traded company, so they have to post financials. We share with our traders when they are ready to register. I have sent them to several here on ET.
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You are ignoring the point I made in my last post. The privately held companies that do disclose financial statements do so, as far as I know, because they are required to. The Chicago Stock Exchange requires you to disclose this information, just as the SEC requires Assent to post financials.

Why don't you post financials yourself? Are you saying that you're not going to do so because you're not required to? If not, then just go ahead and post them. It shouldn't take more than half an hour to do that. Why should I have to wait until I'm ready to register to see your financials? If they are as important as you say they are, shouldn't I see them before I even think of registering with you? Would I be required to sign a confidentiality agreement regarding the financial statements that I receive?
 
Don

I for one appreciate your help and honesty. It is clear that most of these LLC relationships are a mess. It is scarey to think a $10000 trader capital contribution is somehow needed to finance the net trading requirements of the firm.

Now a question for Don?

I have seen many times the significant capital that Bright puts in the LLC part of the balance sheet. As we know a balance sheet is just a snapshot in time, Is there any legal document that you have signed that requires you to "always keep" $10 million in the LLC? If not, and were market conditions to get rough, couldn't you just pull it back at any time putting Bright traders at risk like everywhere else?
 
Quote from mc312:

You are ignoring the point I made in my last post. The privately held companies that do disclose financial statements do so, as far as I know, because they are required to. The Chicago Stock Exchange requires you to disclose this information, just as the SEC requires Assent to post financials.

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OK, the operative words this time are "...as far as I know" - so, let me help you to know a little more. (not being harsh, seriously trying to clear things up). Don't take offense, please.

Publicly traded companies have to post up financials every year, in an audited financial statement to shareholders, thus Assent as part of Sungard.

Private companies, including real trading firms, file "FOCUS" reports quarterly/annually with their exchanges or SRO (Self Regulatory Organization, such as NYSE, CHX, PHX, PSE, etc.) for trading activities.

A privately held company, as Bright Trading, LLC, as an exchange member must file FOCUS, etc. We have the option as to whether or not we want to share this information.

And, since part of giving confidence to our traders in the financial security of the partner they're getting involved with, we disclose our financials to our traders (and others). Similar logic from the other side, if we were concerned that our traders might find out that we have little or no money of our own put up to protect the traders, then we would simply say something like "we don't have to show you" or similar. IMO, that would be a red flag, whether I was starting a Computer store with someone, depositing money in a bank, or trading with a group of some sort.

Again, these are the facts as I know them, combined with my personal opinion of how we like to conduct business.

And, one more thing...you'll notice that I have generally kept a caveat in that if other firm owners want to discuss any of this, I would certainly make time (knowing full well that "they" don't have to listen to Don Bright at all, their prerogative). I have also commented favorably on other regulated "competitors".

I realize all this eems pretty silly to carry on ad infinitum, but I'm always glad to help when I can.

Don
 
Quote from cstu:

Don

I for one appreciate your help and honesty. It is clear that most of these LLC relationships are a mess. It is scary to think a $10000 trader capital contribution is somehow needed to finance the net trading requirements of the firm.

Now a question for Don?

I have seen many times the significant capital that Bright puts in the LLC part of the balance sheet. As we know a balance sheet is just a snapshot in time, Is there any legal document that you have signed that requires you to "always keep" $10 million in the LLC? If not, and were market conditions to get rough, couldn't you just pull it back at any time putting Bright traders at risk like everywhere else?
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We have always done this voluntarily to give our traders confidence, and to provide a comfort level here when pro firms don't belong to SIPC. And, yes, this does give us a competitive advantage, so (as a response to MC), why wouldn't other firms do so to give their traders confidence, and a more level playing field?

We haven't filed any document with ourselves to do so, but have publicly shown it for years. We, of course, have many times that in our "Class A" capital account, so even if the "snapshot" were to change, we would merely move over more money....much more important to us to keep our record as "squeaky clean" as possible...why would we risk that for a few bucks, or a few million?

(Sidebar)...I just don't see all the hassle about checking references of places you may want to work, trade, invest, partner with, etc. Shouldn't we all "do the due (diligence)" in business, right?

Those of you who know me, know full well that Bob and I would be glad to have a public discussion with anyone...we know most of the reputable firm's very well...I have lunch and meetings with many who run other firms...I like to keep in touch with the industry that I love..an "ear to the ground" if you will.

Thanks for the questions...

Don
 
At Bright, how often are the traders privy to the information concerning the "B" side of the balance sheet? Do they receive a daily P&L (names redacted) that shows the financial stability of the LLC? How often do they get balance sheets? How often are they prepared?

What other than your ethics prevented you from removing $10 million from the left side of the "B" side of the LLC on September 12, 2001?

Point is, if the money is always in the "B" it is a wonderful resource for trader safety. If it is not guaranteed to be there and can be pulled at times of market dislocation where is the safety?
 
Quote from cstu:

At Bright, how often are the traders privy to the information concerning the "B" side of the balance sheet? Do they receive a daily P&L (names redacted) that shows the financial stability of the LLC? How often do they get balance sheets? How often are they prepared?

What other than your ethics prevented you from removing $10 million from the left side of the "B" side of the LLC on September 12, 2001?

Point is, if the money is always in the "B" it is a wonderful resource for trader safety. If it is not guaranteed to be there and can be pulled at times of market dislocation where is the safety?
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We have stated that a "minimum" of $10million is put into the 'B' side of the LLC expressly (and repeatedly, LOL), so I don't think we could deny it. An express statement like that pretty much obligates the Firm. And, since all of this is reviewed by (edit 1 from Diane) the Regulators (and my Compliance Officer, "hi Diane"), as are all my emails, webpages, etc., I am sure the traders are covered. (edit 1 con't) "SEC regulations require that a Broker Dealer must thell the SEC if it plans to withdraw 30% of its' excess net capital 2 days prior to withdrawal. We would not be able to just take the money and run".

I guess that maybe the other posters (above) may have a point after all, since this is done voluntarily, it could be construed as marketing...we have done it for a long time just to keep our existing traders comfortable, for all the right reasons.

We only prepare annual audited statements, too costly to do otherwise. FOCUS reports are prepared internally and go through a whole different set of calculations.

Don
 
(Edit # 2, sorry)

(edit #2. "We have significantly more than $10million in the Class B members capital since the accounting changes of FASB 150. So I guess we're saying that we are at risk for much more than the $10million, keeping the traders safer. )

Don (enough already, LOL)

:) :) :) :cool:
 
....than the amount of Class A capital is the manner in which the LLC is structured. Is there a mechanism of "check and balance" in the prop firm which would prevent any member, Class A or B from singlehandedly blowing out the company. There were 2 - 3 companies the past 4 years who took big hits not from the Class B minions but from Class A trading !

I don't think I am far off in saying that the poster boy of Prop firm blowups - Harbor was caused by very few of the Class A traders. If I had a choice of going to Prop A that had 3 Class A members - each looking out for their own selfish interest , thereby ensuring that no single Class A trader goes for the "airport trade" vs. going to Prop B that has a single "big kahuna who is the trader AND also risk manager, ........................
 
what you're saying is a little decieving don. you're saying that a trader with 100k down is protected at 100 times sipc. thats not even near being true. if most of your trader have 10-25k down and are daytrading at 20-100 times there capital and an event hits your 10 million is long gone. if you have 300 traders and each trader is in 200-500k at any one time you'd have $90 million on the line if each trader at 300k . if a nuke hits nobody gets out.also assent is not owned by a publicly traded company. sunguard there owner is private now
 
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