Fraud: Broker kind of "frontruns" client order. Reporting to SEC?

D I Y :
I can motivate everybody to try it out / test it out yourself and see whether it happens at your broker too.
You don't need to actually buy the option, just set a low enough Bid that it normally can't get filled in a foreseeable timeframe, and make it a GTC limit order so that it does not expire at the end of the day.
Then during regular market hours compare what your broker says about the best Bid for that strike with what other sites, like YahooFinance etc., say. Does the best Bid match yours, or is there rather a lower Bid? If it shows a lower Bid, then the fraud is in effect!... Your order has been masked (hidden, not submitted to the orderbook, instead broker or market maker has replaced it with his own... to sell it later to you for a profit for him...)
But of course your Bid has to be the best Bid. This can best be tested with options with small or zero volume...
Of course some systems even allow looking deep in the orderbook, there your order should be locatable as well.
I observed what my broker quoted as well what YahooFinance quoted. They both showed the same lower Bid instead of my higher Bid... and this even a whole week long... until I complained...
 
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thecoder said:
MrMuppet, what is your explanation of this scenario, ie. what do you think has happened and whom to blame for the error?
Why did my Bid not land in the orderbook, and instead a lower Bid of someone else landed there? For more than a week long, then suddenly it got fixed after I complained to the broker.
What is your explanation for this all?
More...
There is no "error".
I asume you trade through a broker that sells your order to an internalizer for profit.
The price of your order has not changed, it just never got routed to an exchange this it did not show up in a lit book.

If you got filled at 0.35$, why even be upset, you got the price you wanted....and if you did not get filled...well that's the price for trading at a comission frrrreeeee broker. Read your brokers 606 statement so you know who you're donating to
 
@MrMuppet, it's not commission free, as it costs $0.65 per contract, though the broker says this is a "fee" instead of "commission".
Anyway, I strongly believe this is a case for the SEC and/or other watchdogs to investigate...

If I submit my Bid to buy in the market, then this Bid has to be listed in the oderbook, otherwise it's fraud done with and profited from my order! This is criminal as well unethical! I hate these greedy slimy damn Ferengi! :)

An interesting text I just discovered that shows who mostly profits from this:
https://daytradingz.com/payment-for-order-flow/
 
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Here's how the SEC online complaint page starts:
SEC_complaint_online.png
 
thecoder said:
MrMuppet, what is your explanation of this scenario, ie. what do you think has happened and whom to blame for the error?
Why did my Bid not land in the orderbook, and instead a lower Bid of someone else landed there? For more than a week long, then suddenly it got fixed after I complained to the broker.
What is your explanation for this all?
More...

7 pages of responses and I bet I have the answer.

It's very simple, operator error.
Because I have done it, and when my bid did not show up, I too was pissed and screamed bs.
Until I realized I had other open orders.

@thecoder....
It all depends on your balances. Say you are showing $50K of buying power, it could be margin, cash, daytrade buying power, whatever. Options are cash trades.

If you have other open orders that you placed before the trade in question, the purchase price required for those orders is subtracted in queue from your buying power. But that doesn't really show up anywhere.

So you can place your new order to buy however many contracts at $0.35 and the system will take it, but it doesn't send the order.

Next time this happens, go in and cancel any and all open orders... then try it again.
You'll see your $0.35 bid pop up on the quote.
I bet money that's your problem here.

You're welcome. :sneaky:
 
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Hey vanzandt, much BS you've written, man! Read the thread first... :)
There's not any other open order, and: it's a cash acct, not margin acct.
And: try to apply logic in everything you do... :-)
 
thecoder said:
Hey vanzandt, much BS you've written, man! Read the thread first... :)
There's not any other open order, and: it's a cash acct, not margin acct.
More...

I did read the thread.
Cash account, margin account, it doesn't matter.
Go in your software, pull up the account details menue. Click on the orders tab.

You may not have any active open orders other than that, but I bet money just by reading how you trade, that you have set "conditional orders" that you have forgotten about.

Guess what, those are queued too. If what you're saying is correct, that there are no other open orders... then you have stale conditional orders that are still open and that you have forgotten about.

I've traded for over 35 years and actively online with stocks and options for at least 23 years. I have 100's of thousands of trades as a retail trader. There is no conspiracy against you. They don't ferret you out as a newbie to milk an extra $5/contract because "you may not notice".

It's operator error bud.
You've got open conditionals or some other open order your missing.
Case closed.
 
And I'll let you in on another little secret..... you may have a "cash account", but there is in fact a little known margin feature applied to these. That feature allows you to close an option position, and open another position with the unsettled funds as long as you hold that new position overnight.

If you screw that up, they will remove that feature from your account and not tell you. Hence you can place your new order and it doesn't show up on the bid because you are trying to use unsettled funds. If it is a GTC order, then it stays in the system and doesn't update itself the next day when the previous trade's funds actually settle.

Don't tell me I'm talking bs son... I know wtf I'm talking about.
You don't.
Obviously.
 
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