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SEC/FINRA Officially Issues Warning on Unregistered Broker Dealers
- Thread starter Itrade2009
- Start date
Isn't this the exact same issue that caused the SEC to go after Warrior Fund last year? They claimed to be a PE firm but the SEC said they were operating as an unregistered BD.
any new developments on this front? I currently trade retail through Tradestation and am very pleased overall with
Tradestation except for commissions. Considering going prop
soon to save$$ on transaction costs but this stance by the SEC
gives me a chill.
The only power any government has is the power to crack down on criminals. Well, when there aren't enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws.
Ayn Rand
Tradestation except for commissions. Considering going prop
soon to save$$ on transaction costs but this stance by the SEC
gives me a chill.
The only power any government has is the power to crack down on criminals. Well, when there aren't enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws.
Ayn Rand
Quote from Illum:
Everyone should stop mentioning names. The people mentioning are the ones who are causing problems. If you got robbed by valez or w/e the scam was, don't hate on everyone else. You are going to scream "I told you so," when it was you who are causing problems. Let the sec try to figure out Madoff scams and why no one bothers to report losses anymore. They can leave the small fish alone. There are honest names being dragged into the mud because some people got taken by scams and want to see everyone screwed like they were. Stop crying to the government. This is exactly why we have a 25krule in the first place. Your loss is your loss. Stop acting like you are on a crusade to save people. You aint Mother Teresa, and this isn't helping anything. If there is a bad actor say it. Why call the sec and talk about good names? This is not helping other traders.
__________________________________________________
Illum:
If you review the Team Trading thread (now over 300 pages), then you will see Itrade2009 has posted warnings regarding these non-registered bd's awhile back. Many of us were NOT aware of such rules (including myself, who is owed funds), and many DID in fact get "scammed".
The "honest names" will not get "dragged into the mud" if they are honest, then they have nothing to worry about.
The SEC is conducting a FORMAL INVESTIGATION on Team Trading, as people are still waiting for their funds to be returned (from several thousands to tens of thousands each). And now complaints are also being filed with the NY Attorney General.
Itrade2009 provides valuable information in helping those who are either unfamiliar with such rules or are attempting to conduct due diligence.
anyone @ the new tuco making money? Is ESRQ still around?
businessstaxes
Guest
these LLC were never unregistered broker dealers. LLC=limited liability corporation...traders are owners of the corporation.
these LLC were corporate accounts and the traders are owners of the firm not customers..which is why the SEC couldn't apply the same rules for individual or 4:1 margins.
but these LLC started to get greedy stole the money from the company. and went bankrupt..that is exactly the same reason broker dealers are insured from bankruptcy just too much risk for fraud. before the 70's broker dealers didn't have insurance so if the bd became insolvent from trading losses or embezzlement or for whatever reason the accounts or customers became unsecured creditors against the firm. these scams gets only bigger as business declines and the managment decides to retire early and take the deposits and run.
too much fraud in a legit setup but SEC must be getting too much fraud complaints about these LLC lately and this always happen bad markets or when business is bad. these LLC seeing less traders opening accounts and it's time take the money run and close shop.
these LLC were corporate accounts and the traders are owners of the firm not customers..which is why the SEC couldn't apply the same rules for individual or 4:1 margins.
but these LLC started to get greedy stole the money from the company. and went bankrupt..that is exactly the same reason broker dealers are insured from bankruptcy just too much risk for fraud. before the 70's broker dealers didn't have insurance so if the bd became insolvent from trading losses or embezzlement or for whatever reason the accounts or customers became unsecured creditors against the firm. these scams gets only bigger as business declines and the managment decides to retire early and take the deposits and run.
too much fraud in a legit setup but SEC must be getting too much fraud complaints about these LLC lately and this always happen bad markets or when business is bad. these LLC seeing less traders opening accounts and it's time take the money run and close shop.
Quote from Itrade2009:
This says it all. So much for firms like Cy Group, Paramount and Epiphany. This says if you have a Master Account and Sub-Accounts you need to treat the sub-accounts like individual customer accounts (and follow $25k PDT and 4-1). Unless of course you are a Registered Broker Dealer.
I told everyone this was coming. I would not have any money at any firm that isn't registered.
http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p121247.pdf
Quote from businessstaxes:
these LLC were never unregistered broker dealers. LLC=limited liability corporation...traders are owners of the corporation.
these LLC were corporate accounts and the traders are owners of the firm not customers..which is why the SEC couldn't apply the same rules for individual or 4:1 margins.
Wrong. These firms ARE unregistered BD's. There is a very specific definition for which entities must register as BD's. These "LLC's" must register due to the functions they perform.
The SEC CAN step in anytime....just ask traders at Tuco and some of the firms that have recently been contacted by the SEC. That is why you are seeing less of these firms.
Quote from businessstaxes:
these LLC were never unregistered broker dealers. LLC=limited liability corporation...traders are owners of the corporation.
these LLC were corporate accounts and the traders are owners of the firm not customers..which is why the SEC couldn't apply the same rules for individual or 4:1 margins.
but these LLC started to get greedy stole the money from the company. and went bankrupt..that is exactly the same reason broker dealers are insured from bankruptcy just too much risk for fraud. before the 70's broker dealers didn't have insurance so if the bd became insolvent from trading losses or embezzlement or for whatever reason the accounts or customers became unsecured creditors against the firm. these scams gets only bigger as business declines and the managment decides to retire early and take the deposits and run.
too much fraud in a legit setup but SEC must be getting too much fraud complaints about these LLC lately and this always happen bad markets or when business is bad. these LLC seeing less traders opening accounts and it's time take the money run and close shop.
businesstaxes:
1. some LLC's are registered B/d's, such as Bright, where traders are class b members, not customers. however some LLC's are simply private equity groups, such as Team Trading, which was NEVER a registered broker, although it was an LLC.
2. traders on some LLC's are NOT owners of the firm, they are designated as independent contractors, who trade on "sub-accounts" and are given 1099 income, not K-1's.
3. your third paragraph describes why traders have filed complaints against Team Trading with allegations of commingling and embezzlement of funds.
4. agreed, too much potential for fraud, but usually in a NON-LEGIT setup run by shady people. however, a good firm can survive in both up and down markets, if it's well run and has honest management/owners.
Then why not just go w/ a registered b/d. Then you don't have to worry about what the SEC is consideringQuote from moneymonger:
any new developments on this front? I currently trade retail through Tradestation and am very pleased overall with
Tradestation except for commissions. Considering going prop
soon to save$$ on transaction costs but this stance by the SEC
gives me a chill.
The only power any government has is the power to crack down on criminals. Well, when there aren't enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws.
Ayn Rand