Yes even Bloomberg. https://www.bloomberg.com/news/arti...extend-to-asia-as-u-s-tech-sinks-markets-wrap. They estimated the losses is only $150 million. I think it should be bigger than that. The min. investment this guy was willing to take was $500K and the highest account size was $10 million and there is 290 clients so on average, the account size is about $5.25 million, if you times that by 290, the loss is in excess of $1.5 billion because he lost every single penny of every single account! If you take a bit more conservative figure and assume half of that, the loss is still $761 million!!
Optionsellers.com goes bust and the apology video is painful to watch
- Thread starter Sweet Bobby
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Yes even Bloomberg. https://www.bloomberg.com/news/arti...extend-to-asia-as-u-s-tech-sinks-markets-wrap. They estimated the losses is only $150 million. I think it should be bigger than that. The min. investment this guy was willing to take was $500K and the highest account size was $10 million and there is 290 clients so on average, the account size is about $5.25 million, if you times that by 290, the loss is in excess of $1.5 billion because he lost every single penny of every single account! If you take a bit more conservative figure and assume half of that, the loss is still $761 million!!
Well, there are a few niggles with the numbers here.
1., 500K * 290 is $145 million, pretty much his quoted loss figure. He is stating, basically, that every account had only $500K in open trade equity, and the rest was sitting in cash.
2.. If that were true, how could he then say that every account lost every penny, because certainly some accounts had a million or more? Did he just siphon off a lot of the client's idle monies and claim business expenses with it, like trips to Australia to watch sunsets with his clients? To buy his watch?
Think there will be a criminal investigation of this? Hell, the SEC has initiated them for far lesser crimes. If there is, maybe the truth will be known.
And I hope his watch is included in the eventual settlement. I mean, that was bad taste.
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The suicide thing was of course exaggeration.
But you seem to still miss one thing: loss or not is not relevant here. What is relevant is a gross misrepresentation to investors regarding risk incurred and investment style. This is illegal and punishable and most likely happened in this case.
But you seem to still miss one thing: loss or not is not relevant here. What is relevant is a gross misrepresentation to investors regarding risk incurred and investment style. This is illegal and punishable and most likely happened in this case.
Even the FT covered this story yesterday. I guess SEC will pick up on this case as well at some point.
At the end of the day the only thing that matters will be what did his clients signed when they signed d docs. If his trading did not deviate from d docs and had language about full loss plus more, The game is basically over. Otherwise anyone can invest into a most risky CTA program and then claim ignorance.
I am certainly no expert on financial law, but I do know regular law language, and specifically contract law.
If the guy said you could lose all your money + more as I trade your money by selling covered calls/puts, and then goes and loses it all by selling uncovered call/puts, that is a breach of contract, and breach of fiduciary duty I guess. But the breach of contract alone would be enough to get any civil judge to decide in favor of plaintiff. How it works in a mess like this I do not know.
Don't joke about suicide. It's not something to joke about. I highly doubt that the guy would be reading this forum, but if he did, no need to say something that would push him over the edge.
I'm pretty sure that for legal warnings, there must have been some warnings about the risks involved with investing. As I said earlier, usually there is some disclaimer that the value of the investment could go to zero (although I'm not sure if the possible loss of more than invested capital was disclosed).
In any case, in terms of punishment...here's a far worse accident where people actually died and many injured along with property damage:
https://www.oregonlive.com/pacific-...f/2018/01/amtrak_engineer_says_he_misjud.html
The conductor admitted to going faster than the speed limit by almost double (79 in a 30). I find this to be very similar to what happened to the fund manager. The fund manager was basically doing the equivalent of 79 in a 30 and was prepared to reduce risk when he thought it was necessary misjudged what he thought would happen just like the conductor. So they both misjudged and caused damage. So what, in your opinion, should happen to the conductor? I'm not sure if the conductor has faced any penalty, but there are no cries encouraging the conductor to be stripped of his clothing and forced to commit suicide. I see this as being a class issue. People are simply more tolerant of mistakes made by members of the middle and lower class than the upper class.
If that's true, then yes, it sounds like he committed mismanagement or fraud...not sure about the legal definition or distinction between the two as it applies to this case.
This is a terrible analogy.
I cannot even begin to spell out why this analogy is just off-the-mark and has nothing to do with trading, has ZERO comparison. Maybe you can if you think of it as being a car you are "conducting" (driving).
It just doesn't work on so many levels, heh.
P.S. 30 MPH speed limit vs. 79 MPH speed? That is almost triple the speed limit, not almost double. Double the speed limit was exceeded at 61 MPH.