Legal Action against a prop arcade?

HungryMind1200

HungryMind1200

Hello Traders,

I submit a $10k capital contribution to a registered prop arcade firm in downtown Manhattan. I submit the capital contribution a few months ago after passing my Series 7. I instructed the firm that I did not want to enable my account until 1/1/2015. I did this to defer all fees until I actually started trading with this firm. From what I was told, this goes against compliance and it was articulated to me that the firm went above and beyond for me (and that I should show some gratitude!). The relationship is a bit tense at this point... not starting off on the right foot.

I didn't have a warm and fuzzy feeling about this as the firm never produced any kind of receipt or acknowledgement regarding my capital deposit or my account with the firm. I filled out dozens of forms, but I never received any confirmation from the firm. The only record that I have is my personal bank statement stating that the funds were deducted from my checking account.

I like to plan ahead... At this point, I've been reaching out to the Compliance officer and my trading desk manager asking for a status. I am not getting any results.

What should my next steps be? Should I queue up my attorney? Should I notify the better business bureau? Should I relax and wait for these guys to get back to me?

Has anyone ever pursued legal action with a prop firm in the past? If so, can you share your experience?

From an ethical standpoint, I can not disclose the name of the firm on this forum until this is ironed out. I sought Class B affiliation with this firm for the capital leverage (10:1 to start, obviously there are draw-down mechanisms in place so I cannot lose any firm-leveraged capital; therefore minimum risk to the firm, like all arcades), and the lower-then-retail commissions. I have traded the markets for over 3 years using various retail brokerages. I am not an expert trader, but I am not a beginner either (I've incurred many loses over the years building my trading plan). Any advice is appreciated. Thank you.
 
I never understand why people never name the firms. The "reason" they screw you is because you "won't" name them. A free market can only work when there is a free flow of information. You are not violating any confidentiality agreement. So if you don't name the firm, no one here can help you. Firm wins again.
 
I agree with you. However, as explained things are already tense and I don't want to stir the pot unless absolutely necessary. If I throw this firm under the bus in a public forum, thus tarnishing their reputation, I will be spiting myself in the long run as I attempt to affiliate with the firm, or get my capital back.

At this point, I'm looking to interact with like-minded individuals, and see if anyone has similar experiences. I'm not shy and I will disclose what I need to, when the time is right.

:-)
 
It's very simple,you have a contract with the firm that stipulates all responsibilities of both you and them. If they or you are failing to deliver on those, action can be taken and the issue will be remedied the proper channels in arbitration as stipulated on your contract. It really is as simple as that. How they feel has no bearing on the outcome.
 
Thank you for the insight. I will review the operating agreement as well as the trader agreement. My only concern is that there is no proof that I submit any capital. I would expect some kind of receipt or acknowledgement? I specifically requested that my account was not activated until 1/1, so maybe that's why I haven't received anything.

I guess I'm a bit turned off that I was treated like a ungrateful nuisance, rather then a client who will be providing income to this business via commissions, fees, etc.

I'm going to wait a few days and see if anybody responds to my inquiries. Thanks again for responding. I'll follow up here in a few days and post the resolution to the thread.
 
HungryMind1200 said:
Thank you for the insight. I will review the operating agreement as well as the trader agreement. My only concern is that there is no proof that I submit any capital. I would expect some kind of receipt or acknowledgement? I specifically requested that my account was not activated until 1/1, so maybe that's why I haven't received anything.

I guess I'm a bit turned off that I was treated like a ungrateful nuisance, rather then a client who will be providing income to this business via commissions, fees, etc.

I'm going to wait a few days and see if anybody responds to my inquiries. Thanks again for responding. I'll follow up here in a few days and post the resolution to the thread.
More...

You are NOT a client. You are a member. Big difference. And if your request was not in the contract, it's immaterial. There is plenty of proof you submitted capital. They are in a highly regulated industry and they have to track and document every wire, every deposit,every withdrawal. That is not the issue here. The issue here is your agreement. You can only enforce what is in that agreement. Nothing more. And one more time, you are NOT a customer. Your agreement specifically states that you are NOT a customer. Make sure you understand that.
 
So you've been calling and emailing these guys for a couple months and have gotten nothing to acknowledge your deposit? What do they say when u call?
 
I've been mostly ignored. I bumped heads with my trading manager a few months ago and since that conversation my phone calls and emails have fallen upon deaf ears. I always try to engage these guys outside of market hours, but that hasn't helped.

I guess I'm not used to this level of member service, or lack thereof. I earn a great living as an Engineering Director, and I've been groomed over the years with stellar communication skills. Great communication separates the heard from the high-caliber top earners in my field. It's just a bit discouraging to invest time, effort, and cash into something only to be ignored. I guess it is what it is. Everyone that I've met down there seems to be a bit psychotic. I would think that I would adapt and fit in just fine ;-)

Maverick, you hit the nail on the head in your last post. My perception was that I was a client (i.e.: I generate income for you) versus a member of their LLC. Perhaps my expectation was set incorrectly. I won't blame others for my ignorance, so I'll fall on my sword and be the first to say shame on ME for not reviewing the agreements closer, or consulting an attorney immediately.

I'm still fearful of where this membership is going to take me. It seems that I'm on their sh!t list, and I haven't even placed one trade with these guys yet. It's very discouraging. In hindsight, I may have been better off subscribing to topsteptrader, or another prop shop that doesn't have as much overhead.

The firm has a handful of regulatory events viewable within a FINRA broker-check. Looks like the most recent incident involved improperly marking sales orders. I guess it is what it is. If I don't like it, I could always pay through the nose for ToS or IB's commissions, and deal with FINRA pattern day trader requirements (I trade equities). I just wonder how challenging it will be to get my deposit back if I absolutely have to pull the plug on this...

(sorry about the long posts)
 
HungryMind1200 said:
My only concern is that there is no proof that I submit any capital.
More...

Did you bring the money over in cash?? If not, how can you be so naive to say there is no proof you submitted any capital??? Clearly a cashed check or wire transfer receipt would be sufficient proof.

I am calling BS to this whole thread unless you name the firm. And even them I am suspicious.
 
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