Open E-Cry and Velocity Affected by Fictious Trades

[schizo]

Quote from cstfx:

Using separate accounts carried at two different registered futures commission merchants, Open E Cry LLC and Velocity Futures, LLC, Yunusov’s trading resulted in more than $7.8 million in losses to his Open E Cry account and an approximate $7.2 million profit to his Velocity account, after commissions and fees. Open E Cry has had to cover the losses from its own proprietary funds, according to the complaint.

http://www.cftc.gov/PressRoom/PressReleases/pr5836-10.html

From what I can tell, all this individual did was engaging in money laudering by transferring money from one brokerage account to another. But is this really considered money laundering when both accounts are under your own name?

SEC has always been a joke and you can now add CFTC to the same league.

 

[startraitor]

I just hope he actually resides in Russia and they moved the money there before they were busted.

 

[jeb9999]

Quote from Rodney King:

Could you offer some recent examples of innocent-bystander customers losing seg funds when an FCM failed? I recall Volume Investors, but that was 25 years ago, and I believe all customers were made whole. Thanks.

Just because it hasn't happened recently doesn't mean that it can't happen.

OEC only has capital of $3.8 million (April CFTC FCM report). Good thing they are owed by OptionsExpress with deep pockets.

If you knew the details of the Volume Investors blowout you would know that the customers were made whole only if you don't consider the huge losses generated by the firesale liquidations of open option positions. Look up some of the Volume Investor lawsuits to see how the COMEX screwed over members with badly liquidated option positions.

 

[Rodney King]

Quote from jeb9999:

Just because it hasn't happened recently doesn't mean that it can't happen.

That didn't answer my clear, simple, factual question. Could you try again, please? Thanks.

 

[jeb9999]

Quote from schizo:

From what I can tell, all this individual did was engaging in money laudering by transferring money from one brokerage account to another. But is this really considered money laundering when both accounts are under your own name?

SEC has always been a joke and you can now add CFTC to the same league.

Money laundering requires that you have money in the first place. The $7.8 milion loss clearly indicates there was little money to start with in the OEC account.

All government agencies are a joke. Does Homeland Security make you feel secure?

 

[Chicago_CTA]

Quote from Rodney King:

Could you offer some recent examples of innocent-bystander customers losing seg funds when an FCM failed? I recall Volume Investors, but that was 25 years ago, and I believe all customers were made whole. Thanks.

No specific instance comes to mind, fortunately.

Imagine OEC didn't have the $9mm cash to cover the loss. Since accounts are reconciled at the end of the day, the money may have been deducted from other client accounts at OEC.

I disagree the CFTC is a "joke." I think the CFTC, in strong contrast to the SEC, generally does a good job.

It would be nice if someone from OEC would comment on this thread, i.e., if the $9mm wasn't on hand, where would that money have been debited from?

This looks quite bad for OEC.

 

[jeb9999]

Quote from Rodney King:

That didn't answer my clear, simple, factual question. Could you try again, please? Thanks.

What is your problem? Are you an apologist for the CFTC and/or the futures industry?

I answered your question.

Just because there are no recent losses of segregated funds does not mean that such losses cannot happen tomorrow or at some other point in the future.

Segregated funds is a very weak customer protection scheme. Having to take legal action and waiting many months to over a year to get what is left of your money back is not proper customer protection. What the CFTC and the futures industry does not tell you is that you do not get back what is lost on the liquidation of open positons at arbitrary prices.

The Volume Investors clearing firm failure in 1985 was a major mess and embarrassment for the COMEX. The failure of the clearing firm Klein and Co. Futures Inc in May, 2000 was a similar ugly mess.

At some point in the future another futures clearing firm will fail and it will be an ugly mess.

 

[nazzdack]

Quote from Chicago_CTA:
---if the $9mm wasn't on hand, where would that money have been debited from?

?....Since russian rubles were traded via Globex, the CME would have to pay the deficit. Then the CME would have to go about collecting the debt from OEC......I think.

 

[atticus]

Quote from Chicago_CTA:

No specific instance comes to mind, fortunately.

Imagine OEC didn't have the $9mm cash to cover the loss. Since accounts are reconciled at the end of the day, the money may have been deducted from other client accounts at OEC.

I disagree the CFTC is a "joke." I think the CFTC, in strong contrast to the SEC, generally does a good job.

It would be nice if someone from OEC would comment on this thread, i.e., if the $9mm wasn't on hand, where would that money have been debited from?

This looks quite bad for OEC.

I would assume their parent, OXPS, would take the hit.

 

[atticus]

Quote from Rodney King:

That didn't answer my clear, simple, factual question. Could you try again, please? Thanks.

Peregrine in the UK, and Spike Trading in the US. All within the last 15 years. Peregine's clients got back $0.65 on the dollar, IIRC.