So is this an anti-IB scam?
- Thread starter kiwi_trader
- Start date
The OP says it was a "happy IB customer", so it's hard to imagine why they would jump to the (ridiculous, unfounded) conclusion they did - an argument against their own interest. I don't know how you leap from rule violations such as these to a comparison with Refco, who became insolvent because of poor risk management. One has nothing to do with the other.
I think that what the o.p. was trying to say was that the false rumor, which grossly exaggerated the significance of these rule violations, passed to the o.p. from another happy customer, but not that the rumor was originated by a happy customer. I think that the original source of this false rumor must have been highly motivated to damage IB's reputation, and immediately seized upon the NFA complaint as an opportunity to do so. Notice that the complaint was filed on June2, but it was not docketed until June 12, 2006, and yet, it was circulating, along with the false rumor, on the very same day. The person who started the rumor probably knew about the complaint before it was docketed, and was therefore ready to strike as soon as the complaint became publicly available. The rumor then spread like a virus, between people who bore no ill-will toward IB, but who were worried by the rumor.
Thats correct. In parallel with starting this thread I passed my opinion back to the person who sent me the email and followed up again including the thread title once some more informed opinions had been offered. They reemailed everyone they had emailed and posted it to a chat room (a viral inoculation? or maybe an antiviral).
IB Comment on the original allegation
Also, IB pm'd me and I gave them some extra information about the emailer's source so that they could correct the, hopefully (hmmm), simple misunderstanding that generated it.
Lets hope that bird flu can be dealt with as quickly.
IB is the 16th largest securities firm in America...
And according to their latest posted financial statement...
One can do some very approximate analysis:
http://www.interactivebrokers.com/download/IBLLC_1Q06_Unaud_Finls.pdf
So IB has about $3 billion in customer accounts...
And $270 million in Net Capital (roughly liquidation value).
Also, most customer accounts are fully insured.
Obviously, the futures business with only about $100 million in customer funds...
Represents a small part of their business... maybe 5%.
The action posted to start this thread should NOT be a cause for concern.
Also...
You can check the regulatory history of any firm here:
http://www.nasd.com/InvestorInformation/InvestorProtection/NASDW_005882
It's free...
And the NASD will email you a report going back 10 years or so... in about 48 hours.
But you really must have regulatory experience to properly evaluate a firm's history.
ALL firms the size of IB will have many minor infractions...
Such as "reporting" violations or "supervision" violations.
But you do not want to see a pattern of organized deceitful behavior...
Like, for example, organized cheating by Specialists or market makers.
If you see that... I guarentee you it comes from the top.
*** It's important to understand that many issues are in a "grey area" ***
Especially highly technical issues.
The thing about an uber-computerized leading edge firm like IB...
Is that they are always walking a fine line between automation and compliance.
They are always pushing to see what they can get away with when automating...
And will be occasionally be told to program things differently (and possibly fined).
This is not necesssarily a bad thing...
Because by pushing the envelope... IB has brought costs down for all of us.
And according to their latest posted financial statement...
One can do some very approximate analysis:
http://www.interactivebrokers.com/download/IBLLC_1Q06_Unaud_Finls.pdf
So IB has about $3 billion in customer accounts...
And $270 million in Net Capital (roughly liquidation value).
Also, most customer accounts are fully insured.
Obviously, the futures business with only about $100 million in customer funds...
Represents a small part of their business... maybe 5%.
The action posted to start this thread should NOT be a cause for concern.
Also...
You can check the regulatory history of any firm here:
http://www.nasd.com/InvestorInformation/InvestorProtection/NASDW_005882
It's free...
And the NASD will email you a report going back 10 years or so... in about 48 hours.
But you really must have regulatory experience to properly evaluate a firm's history.
ALL firms the size of IB will have many minor infractions...
Such as "reporting" violations or "supervision" violations.
But you do not want to see a pattern of organized deceitful behavior...
Like, for example, organized cheating by Specialists or market makers.
If you see that... I guarentee you it comes from the top.
*** It's important to understand that many issues are in a "grey area" ***
Especially highly technical issues.
The thing about an uber-computerized leading edge firm like IB...
Is that they are always walking a fine line between automation and compliance.
They are always pushing to see what they can get away with when automating...
And will be occasionally be told to program things differently (and possibly fined).
This is not necesssarily a bad thing...
Because by pushing the envelope... IB has brought costs down for all of us.
