SEC/FINRA Officially Issues Warning on Unregistered Broker Dealers

Both you guys don't have that many posts on elite from what I can see next to your anonymous ids.

Prop trading firms have evolved over the years in question partially due to heat from regulators. Much of this is not transparent to traders or on elite. How many of the firms have remained fully in-tact doing business the same way over the years?

I only brought up this story-line a few times this decade. Originally, when one well-known firm accused us of helping prop trading firms disguise customer relationships - in our role as commentator for the industry not with a customer- next with Tuco and maybe one other time max.

This time, a leading CEO – you all know – prompted me to get involved again and implied more regulatory issues were about to drop.

I only write on elite about the financial-transaction tax and now again on this issue.

If others want me to beg-off here too, I will. I don’t want to be shot as a messenger –especially if the message is not clear and certain and only hearsay and analysis – and negative postings are bad for business.
 
Quote from Robert A. Green:

Both you guys don't have that many posts on elite from what I can see next to your anonymous ids.

Prop trading firms have evolved over the years in question partially due to heat from regulators. Much of this is not transparent to traders or on elite. How many of the firms have remained fully in-tact doing business the same way over the years?

I only brought up this story-line a few times this decade. Originally, when one well-known firm accused us of helping prop trading firms disguise customer relationships - in our role as commentator for the industry not with a customer- next with Tuco and maybe one other time max.

This time, a leading CEO – you all know – prompted me to get involved again and implied more regulatory issues were about to drop.

I only write on elite about the financial-transaction tax and now again on this issue.

If others want me to beg-off here too, I will. I don’t want to be shot as a messenger –especially if the message is not clear and certain and only hearsay and analysis – and negative postings are bad for business.
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I think a lot of the less vocal professionals on this board appreciate this information. Flak like this is above is just the standard piker side of elitetrader. The SEC's action against Tuco caused the rest of the prop industry to change. That occurred along the lines as you first indicated. It's clear these issues will affect other traders' livelihood, so I for one appreciate the info.

They haven't gone after the deposit model after all of these years, despite your hints 5 years ago or so, but given how easy it is for prop firms to act unethically with traders' deposits, I wouldn't be surprised that would be an issue in this environment.
 
i think perhaps you should reread the disclosure more carefully before making a blanket statement. this is merely an advisory bulletin, subject to several interpretations depending on the structure of a firm's master/sub strategies and asset allocation and trader responsibility.
what it is doing is eliminating the former assent scams that took down that company in the last year of "restructuring" by finra and the sec to get firms registered and following the rules.


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
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Although I do not know Robert Green personally, one of his bulletins was read by a collegue of mine in November of 2009. He became skeptical of the prop industry, and was fortunate enough to pull out $10,000 of his trader deposit...with Team Trading! A firm that closed its doors in March 2010 without returning over 400 other traders' deposits.

So even if what Robert Green posts requires further due diligence, if it raises some eyebrows and prevents just one trader from getting scammed, then I'd say his posts are worth reading.
 
"So in essence Tuco was operating as a ponzi scheme"

All you fools who talk about tuco on this site as if you know anything about what happend is such a joke. Let me clear thinking up a bit for you. I will never say names.

A trader, who was given millions in bp on huge leverage greater than 100 to one, losts 1.5 million in firm and his own capital in a matter of 2 weeks. There was no "Ponzi scheme" There was a huge loss taken by the company, and the loss was so great that it wiped out other trdaers capital.

How do I know? ,Well I was sitting next to the risk manager when it happend. I lost 18,000 in one account, and was able to save 9,000 in another because I took swift action the day the loss of over 1.2 million happend, which was after the trader had already lost 300,000 not 7 trading periods before. This took place around sept 15 2007, give or take a week.
 
seems to me there were a lot of stupid people out there trading with this team.

fools and their money soon parted.
and rightly so.

Quote from ScalperJoe:

Although I do not know Robert Green personally, one of his bulletins was read by a collegue of mine in November of 2009. He became skeptical of the prop industry, and was fortunate enough to pull out $10,000 of his trader deposit...with Team Trading! A firm that closed its doors in March 2010 without returning over 400 other traders' deposits.

So even if what Robert Green posts requires further due diligence, if it raises some eyebrows and prevents just one trader from getting scammed, then I'd say his posts are worth reading.
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I would assume that GS reacted because they are not really involved in the smaller prop trading business that we on ET are familiar with. They could care less if Bright stays or goes. How many prop firms clear Goldman? Answer: 1.

Penson and other prop trading clearing firms are not going to change anything.

Prop trading is here to stay.







Quote from Robert A. Green:

A follow up to my earlier posts on this thread are on another thread.

http://www.elitetrader.com/vb/showthread.php?threadid=204053

Bright Trading model changes - which I think are a result of FINRA regulatory notice 10-18. Bright's clearing broker Goldman Sachs seems to have reacted to this regulatory pressure.
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Quote from t0pd0g:

I would assume that GS reacted because they are not really involved in the smaller prop trading business that we on ET are familiar with. They could care less if Bright stays or goes. How many prop firms clear Goldman? Answer: 1.

Penson and other prop trading clearing firms are not going to change anything.

Prop trading is here to stay.
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I agree with the "here to stay" - and only wish the number who clear GS was only 1. Our friends at Generic (G2) of course clear GS. I'm told a couple of dozen "similar" funds/firms. It's tough to think about putting a bunch of money with a Clearing Firm that has less capital than you do...we don't have that problem with GS, LOL.

Don
 
OK, so maybe a handful of firms clear GS. But the few firms that do clear there add 0.00000000001% to Goldman's bottom line. I imagine that is not the case for Penson or perhaps Wedbush.

Don, can you elaborate more on a post from an earlier thread where you said you might consider a CBSX structure for Bright.

Thanks Don!



Quote from Don Bright:

I agree with the "here to stay" - and only wish the number who clear GS was only 1. Our friends at Generic (G2) of course clear GS. I'm told a couple of dozen "similar" funds/firms. It's tough to think about putting a bunch of money with a Clearing Firm that has less capital than you do...we don't have that problem with GS, LOL.

Don
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