Friend needing advice and I cant help...

P

pongu

Hi everyone,

It's been a long time since I posted something here last. I'm not experienced in dealing with these new non registered LLC prop shops. They all seem to be very vague in what they can and can't do. Thus, I'm seeking help from the community for a friend who got into a bind with a LLC prop firm. He had a small 5k prop account with a firm and traded part time but took a large 1 day loss and the account went negative by roughly $1200. He is not licensed but did sign some agreements and verbally promised that he would have risk controls so the account doesn't go negative. Now the firm is coming after him for the money and is threatening legal action, ie small claims court. Does the firm have any standing? He did not trade beyond what the firm said was his limits in terms of share size etc... I work for an investment bank and it seems to me that it should be the firm's risk manager's job to make sure a trader doesn't go beyond their account limits and that it's the risk they take giving traders large leverage.
Feel free ti PM me if you feel uncomfortable speaking about legal issues in public. Thanks everyone for your insights.
 
He wont go to small claims court if he isnt served. Just tell him not to accept any certified letters in the mail and to be careful of strange men approaching him.

Small claims court is a kangaroo court where the law seems to go out the window. The judge is usually not that understanding and very impatient. In Westminster, California, there is a judge that barely speaks English and has a strong Vietnamese accent who makes decisions on cases daily.

http://www.judgenguyen.com/

Your friend's best bet is to simply not get served. If he does go to court, then expect to get a judge who may barely know the law or who is incompetent.

The prop firm will argue that there was a binding contract. Your friend will look clueless, put his hands up and make the excuse "Oh I didnt know there was a contract.". Then the judge will smile and say in a rough Vietnamese accent that he will mail the decision. Then your friend will get the decision saying he owes the firm $1200.

Your friend wont pay and then it will go on his credit report essentially tanking his score. Then he will not be able to buy an overpriced house.
 
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