Final results of my arbitration case against FIRSTRADE

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xiaozhi

10 months ago, my roll-over ira account had 30 unauthorized trades on a pink sheet. IWRS.PK at price of 0.5, (now 0.002)
Here is the post before.
http://elitetrader.com/vb/showthread.php?s=&threadid=90767&perpage=6&pagenumber=1

After a long waiting, I finally get the arbitration results. I was awarded the full amount of the unauthorized purchase and the arbitration fees. My requests on interests and other fees are denied.
But better than nothing. My other IRA increases over 36% last year.

So I do see other people have similar cases. I encourage them to start the process as soon as possible.

To summarize, I think Firtrade is the worst broker I have ever had. AVOID THEM AS PLAGUE. They have the worse security ever.
1. They have no customer service, no one ever call me back. They lock your account as they want.
2. They have NO security in place. They never record the IP address of logging in and ordering. I ask them to provide evidence of my log history and they told me all information is through their execution provider and they do not store those information.
3. Their execution sucks too. My market order to buy a popular ETF is executed 10 minutes later while I bought the same ETF the same time in IB in 1 sec. And the price is much better.
4. I moved during the arbitration and notify both parties. They send me letters 2 months after this to my old address. NO ONE work there to care about you! They even mail me some weird taxi invoice in their document. I bet their accounting department and compliance officer all sit together chatting all day.
 
you need to call your state sec regulator. You will find, as most do, you'll have an East European IP address.

Perhaps the info you provide will lead to a prosecution.

For the uninitiated, they use your accounts to pump what you own, or if they are naked short and want to cover, if they know you have a position, they will sell your shares into their bid. That is one rare, but I saw it happen.

It is not an isolated problem.
 
I will write up some update on the procedure for everyone's benefits.
One quick questions. I got the check, Do I need to pay tax on this? My account that has loss is an IRA account. So i got this tax free?
 
Court settlements are always tax free. Since you LOST money in your IRA, but were awarded damages via court, yes my opinion is you have that money tax-free. Congrats!

Quote from xiaozhi:

I will write up some update on the procedure for everyone's benefits.
One quick questions. I got the check, Do I need to pay tax on this? My account that has loss is an IRA account. So i got this tax free?
More...
 
Quote from xiaozhi:

I will write up some update on the procedure for everyone's benefits.
One quick questions. I got the check, Do I need to pay tax on this? My account that has loss is an IRA account. So i got this tax free?
More...
paying tax on the check, no clue, but one thing I am sure you can't take loss in IRA I have no clue how you are able to do that.
 
Steps 1: Call the broker immediately and lock the account. Most of the time good broker will reverse it immediately. (Firstrade never call me back to reverse these, they lock my account without my permission)

Steps 2: Call their compliance officer in the brokerage to require all log history on your account. You need these to find out why. (Firstrade do have NO log history and they never find it for you too. The compliance officer never calls back and claims most of these information are at their clearing house. What the f***. Clearing house only store the order routing information not the log in history)

Steps 3: Always report to SEC and NASD even this is solved! Bad broker will get punished! (Firstrade give no response to NASD and SEC, they are just ignoring.)

SEC Complaints: http://www.sec.gov/complaint.shtml
NASD Complaints: InvestorComplaints@nasd.com
Your State Securities Department: Google it.

NASD is responsible for determining whether brokerage firms and associated persons are in compliance with the federal securities regulations and NASD Rules. If a determination is made to initiate an investigation, an NASD examiner may contact you to obtain further information or documentation about your complaint.

NASD investigations are conducted for the purpose of protecting all public investors. Information about our investor complaint program and NASD's role in investigating investor complaints is available online in our Investor Complaint Program brochure at http://www.nasd.com/complaint/InvestorBrochure.


Step4 : If you are unlucky like me, go for Arbitration. This will require a filing fee and some efforts. If your case is over 50K, most lawyer are willing to take it for 33% contingent fees. (So you pay them 33% of the award) In most states, these are punitive damage to the respondent. So The broker will pay for it later if you won the case. In my case, some small lawyer are willing to consider it first but quit after they heard it is Firstrade. One lawyer told me, they never try do arbitration with Firstrade/Charles Schwabs/Scottrade. They are black listed on his dictionary.

Filing a complaint through the Investor Complaint Center is not the same as submitting an arbitration claim online. To start an arbitration or mediation, please visit the Arbitration & Mediation section of the NASD Web site at: http://www.nasd.com/ArbitrationMediation/index.htm. Information on how to start an arbitration or mediation can be found on the NASD Web site at: http://www.nasd.com/ArbitrationMediation/index.htm.

You have to submitted the check and claim form and supporting documents within 30 days of the starting of your claims. My supporting includes: trade history, unauthorized trade detail, proof of my security of my computer network, your router traffic for that specific time, my firewall and antivirus purchase invoice, Firstrade’s email response on their crappy security.

After this, you will wait for 1-3 months for them to assign arbitrator(s). If the case is over 25K, you can require a hearing and you must select three arbitrators. Otherwise, no hearing and no arbitrator. You have to select arbitrator form a list. You can review the arbitrator’s resume to decide which one to pick. Always choose the one who judge more towards the small investors and has online broker. (they are more willing to judge in favor of you since they understand more business.)


After the broker respond the requests, you have 30 days to respond.

Then the arbitrator will make decision in 30 days. Just pray for the good result at that time.



PREVENTIVE STEPS for these:
1. DO NOT CHOOSE CRAPPY FIRSTRADE!!!
2. Install firewall on home computer; enable logging history on the router! I use linksys WRT54GL routers.
3. Have instant email alerts on all trades, IB/TOS/AMTD all has it. FIRSTRADE has none.
4. Change password often.
5. Do not ACAT account when you transfer brokers unless it is IRA. I highly suspect the case is an internal security breach of Firstrade. I submit two IRA/401K requests on 3/17/2007, one Firstrade to Thinkorswim and one from scotrade. The one from scotrade go through and the on from Firstrade did not go through due to some weird reasons. I got the call from TOS on 3/23/07 (Friday) about the failure of transfer. ON the next Monday 3/26 , my account was breached and the shit happened. I doubt some one in Firstrade sell my information to do this. Since you have no access and no idea on the ACAT process. When it is passed to thinkorswim, it is much more difficult to trace who is at fault. SO, do not try to ACAT unless you have to!
 
Thanks for the advice.
I already did that!

I called Firstrade, their IT deparment (I bet only 1-2 people there) told me the only address is my home IP when I sign up accounts. They do not store the IP log in their database. He told me their clearing house has it. What a joke... They treat me as idiots. clearing house only record the order routing and execution. They record the ip history and the order and send it to the clearing house. crap.

I highly suspect the case is an internal security breach of Firstrade. I submit two IRA/401K requests on 3/17/2007, one Firstrade to Thinkorswim and one from scotrade. The one from scotrade go through and the on from Firstrade did not go through due to some weird reasons. I got the call from TOS on 3/23/07 (Friday) about the failure of transfer. ON the next Monday 3/26 , my account was breached and the shit happened. I doubt some one in Firstrade sell my information to do this. Since you have no access and no idea on the ACAT process. When it is passed to thinkorswim, it is much more difficult to trace who is at fault.

What is more, I track my router history, no log on my router during that day since no one is at home. My work place is not even possible. I called IB, IB told me there is no other IP besides my home ip and work ip.
So I do not think my security is compromised anywhere.


Quote from flytiger:

you need to call your state sec regulator. You will find, as most do, you'll have an East European IP address.

Perhaps the info you provide will lead to a prosecution.

For the uninitiated, they use your accounts to pump what you own, or if they are naked short and want to cover, if they know you have a position, they will sell your shares into their bid. That is one rare, but I saw it happen.

It is not an isolated problem.
More...
 
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