Unregistered LLCs and Canadian Based Companies busted

Quote from SgtSlottter:

You are right about the IT and potential of the online brokers being victims when it comes to the actual registered broker dealers where the hacker stole the account info. No doubt, the clients of those firms will be returned their capital.

I posted in the 'prop firm' section since I think there is a bigger point here. If you use a registered broker dealer, not an unregistered broker dealer, the CBOE or FINRA or PHLX require outside brokerage disclosure, monitoring of trades, compliance reporting, etc etc etc. Another one firms check daily is if a person does a high percent of volume in an individual symbol. Then they are supposed to review the trades and look for manipulation. If this was done through regular Registered BDs, this would have been over before it started. We all know regulation of stock trading isn't perfect even with registered BDs, but this would not have occured. Apparently this guy wasn't even documented ID wise with most of the entities he perpetrated the fraud through. He sure as hell knew to go to unregistered LLCs to do what he was doing.

So basically, these companies which allowed this to happen cut corners and put their owners, companies, and traders at risk. If you put capital in one of these UNREGISTERED firms, and they can't pay their fines on their own, your money may be used to pay them.

If you trade through one of these companies, you are really inviting trouble on yourself. Now we can add these companies to the to the list of people who got in trouble, which includes the likes of Tuco, Warrior Fund, Team Trading, Jasper Capital, and HLV.

As much as I have been flagging some concerns on about a specific registered BD, I think everyone should consider that company over these. While no answers have been provided there on important questions, at least someone (the CBOE) is watching many aspects of their business and keeping some accountability. These Unregistered companies just have no accountability and can be exploited, raising the probability your money is at risk.
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I see. It is speculative, but people should possibly heed to it as a warning. Bottom line...go with firms you can trust. Just saying, the 5k that most offer is not a huge deal with the benefits they give you...

Do your homework and go with people you can trust.
 
What about MF Global? The regulations only price out the smaller firms who aren't willing to take as much risk. Anything can bring down a firm.

Your $$ is always going to be at risk when you're subscribing to leverage.

The first regulations came onto the food industry. The larger meat-packers were losing market-share to small ones and worked with government to "regulate" the competition. It gives the bigger companies a comparative-advantage when it comes to filling out paperwork :p
 
Quote from SgtSlottter:

Here is the Canadian aspect.

http://www.sec.gov/litigation/admin/2012/34-66248.pdf

See # 6

http://www.sec.gov/litigation/admin/2012/34-66249.pdf

See # 20 (screenshot attached)


edit: Sorry I can't get the screenshot to post so you'll have to click on the link.
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Both documents do not involve "busting" Canadian firms.

Both documents detail out how US firms are being fined or sanctioned (not "busted") for providing 3rd party access to the markets to unregistered individuals that resulted in a security breach and stock fraud.

THEY DON'T EVEN NAME THE CANADIAN ENTITY ON THE LEGAL DOCS AS A DEFENDANT OR RECEIVER OF SAID FINES.

YOUR THREAD TITLE IS STILL MISLEADING!

All that's happening here is SEC regulated firms getting slapped around for providing access to 'end users' they shouldn't be servicing. and not doing proper due diligence on their 'end user' clients. There's NOTHING wrong with being a service provider to other firms for market access (to a firm based in the US or Canada,) so long as they are complying with the rules imposed upon them by the SEC as it relates to record keeping and serving specific types of end users (not the Canadian referring broker, but the end clients who are actually executing the trades.)

It's your hysterics without actually knowing what you're talking about that bothers me... you mean well, in the "watch out and protect yourself fellow citizens" sorta way, but you can only hear chicken little scream about the sky falling so many times before you want to step on him.
 
Quote from Jack_Larkin:

Both documents do not involve "busting" Canadian firms.

Both documents detail out how US firms are being fined or sanctioned (not "busted") for providing 3rd party access to the markets to unregistered individuals that resulted in a security breach and stock fraud.

THEY DON'T EVEN NAME THE CANADIAN ENTITY ON THE LEGAL DOCS AS A DEFENDANT OR RECEIVER OF SAID FINES.

YOUR THREAD TITLE IS STILL MISLEADING!

All that's happening here is SEC regulated firms getting slapped around for providing access to 'end users' they shouldn't be servicing. and not doing proper due diligence on their 'end user' clients. There's NOTHING wrong with being a service provider to other firms for market access (to a firm based in the US or Canada,) so long as they are complying with the rules imposed upon them by the SEC as it relates to record keeping and serving specific types of end users (not the Canadian referring broker, but the end clients who are actually executing the trades.)

It's your hysterics without actually knowing what you're talking about that bothers me... you mean well, in the "watch out and protect yourself fellow citizens" sorta way, but you can only hear chicken little scream about the sky falling so many times before you want to step on him.
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At Citi, it's called "CAD" - Customer Account Due-dilligence. The way I've seen it used makes it probably the most discriminating and racist policy I have seen. If you have an arab name, you are automatically under inspection with the per-emptive assumption that you are somehow related in activities that pose a danger to the state.

In this case, the parties named were likely nowhere near responsible for the security of the accounts that were effected. Whomever the broker-dealer was that is providing access is responsible.

The reason why funds aren't as secure as they could be is because of the false notion that big brother government is going to regulate the markets to safety. Most of the jerks writing these regulations are either employees of big banks or elitists who have never participated in trading the markets actively yet they are going to provide security and oversight over your funds?

The SEC/FINRA are simply too inefficient to handle this stuff anymore. They chased a lot of business overseas, where they have 0 jurisdiction and now funds are going to be less safe than they were to begin with with all these international broker-dealers. Not to mention, foreign investors don't want to put their $$ in US BDs because of the all the fraudulent costs involved such as compliance & licensing. You in yourself may not see this as a burden to doing business competitively with other nations, but the fact of the matter is, when you aggregate the redtape , the largest corporations have a comparative-advantage when it comes to filling out paperwork. The regulators have even admited they regulate to obtain "institutional solvency"...not many of the consumers asked for these protections in my opinion.
 
Quote from EvOTraderV2:

At Citi, it's called "CAD" - Customer Account Due-dilligence. The way I've seen it used makes it probably the most discriminating and racist policy I have seen. If you have an arab name, you are automatically under inspection with the per-emptive assumption that you are somehow related in activities that pose a danger to the state.

In this case, the parties named were likely nowhere near responsible for the security of the accounts that were effected. Whomever the broker-dealer was that is providing access is responsible.

The reason why funds aren't as secure as they could be is because of the false notion that big brother government is going to regulate the markets to safety. Most of the jerks writing these regulations are either employees of big banks or elitists who have never participated in trading the markets actively yet they are going to provide security and oversight over your funds?

The SEC/FINRA are simply too inefficient to handle this stuff anymore. They chased a lot of business overseas, where they have 0 jurisdiction and now funds are going to be less safe than they were to begin with with all these international broker-dealers. Not to mention, foreign investors don't want to put their $$ in US BDs because of the all the fraudulent costs involved such as compliance & licensing. You in yourself may not see this as a burden to doing business competitively with other nations, but the fact of the matter is, when you aggregate the redtape , the largest corporations have a comparative-advantage when it comes to filling out paperwork. The regulators have even admited they regulate to obtain "institutional solvency"...not many of the consumers asked for these protections in my opinion.
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What international broker dealers? I haven't heard of active traders working for Banco Santandar or BNP etc.

The controversial companies in this case are not broker dealers. The releases specifically say Mercury and the Alchemy where the trader traded were not registered BDs.

And come on, fraudulent licensing costs? They don't cost that much money for the trader (only WTS and its subs charges $700 bucks a year to its traders for compliance) and considering the marketing techniques of CBSX BDS which were pushing retail traders to become prop while CBSX required no licenses, requiring a basic license to filter out the people who get suckered in but are not appropriate is probably a good thing.

Red tape? You mean traders getting fingerprinted to make sure they're not felons? Otherwise as far as I know, registered broker dealers require a part time Finop, monthly focus reports and an independent audit. None of that effects the traders.

This is not a matter of US day traders, nor firms, being at a competitive advantage. Plenty of US bds are surviving in New York, New Jersey and Chicago where the trading talent is. That is why it is concerning that people fall for going for some sketchy option when normal compliant ones proliferate.
 
Quote from Jack_Larkin:

Both documents do not involve "busting" Canadian firms.

Both documents detail out how US firms are being fined or sanctioned (not "busted") for providing 3rd party access to the markets to unregistered individuals that resulted in a security breach and stock fraud.

THEY DON'T EVEN NAME THE CANADIAN ENTITY ON THE LEGAL DOCS AS A DEFENDANT OR RECEIVER OF SAID FINES.

YOUR THREAD TITLE IS STILL MISLEADING!

All that's happening here is SEC regulated firms getting slapped around for providing access to 'end users' they shouldn't be servicing. and not doing proper due diligence on their 'end user' clients. There's NOTHING wrong with being a service provider to other firms for market access (to a firm based in the US or Canada,) so long as they are complying with the rules imposed upon them by the SEC as it relates to record keeping and serving specific types of end users (not the Canadian referring broker, but the end clients who are actually executing the trades.)

It's your hysterics without actually knowing what you're talking about that bothers me... you mean well, in the "watch out and protect yourself fellow citizens" sorta way, but you can only hear chicken little scream about the sky falling so many times before you want to step on him.
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I know exactly what I am talking about. That is what you don't like. I didn't say the sky is falling. It isn't unless you're wrapped up in this, Tuco, or Team Trading... Or the next one I just say / said to choose a registered company and ask a lot of questions even to them.



WHAT IS MISLEADING ABOUT THE THREAD TITLE?

Okay, split hairs and it change it to:

"CANADIAN UNREGISTERED ENTITY AFFILIATED WITH / RUN BY ONE PERSON BANNED FOR LIFE BY THE SEC AND ONE BANNED FOR TWO YEARS BY THE CBOE INVOLVED IN MARKET MANIPULATION SCHEME; OTHER UNREGISTERED CANADIAN COMPANY ALSO INVOLVED."

How's that?
 
Quote from SgtSlottter:

This is not a matter of US day traders, nor firms, being at a competitive advantage. Plenty of US bds are surviving in New York, New Jersey and Chicago where the trading talent is. That is why it is concerning that people fall for going for some sketchy option when normal compliant ones proliferate.
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i don't think mercury would be doing nearly a billion shares a month if they weren't a teeny bit honest and also fulfilling some sort of obvious market demand. namely, a very small deposit, high relative leverage, industry platforms, low fees, and little hurdles in setting up an acct. no real b/d prop can compete with that.

you also have to understand the primary client: newbie punters with a few grand, trying their hand at equity trading. they can't do that retail (PDT rules), and it's not worth it to them to jump through hoops to have the "privilege" of trading at some stuffy b/d prop. i get it. in the past, it was the bright's (et al) who would churn these guys, but its moved out to the swifts/mercurys.

now, in order for these firms to be more competitive than b/d props, they cut corners. money is co-mingled, cash flow/receivables/deposits are all the same thing, risk is firm-wide, etc. the traders know this though, its a risk they take to get easy, cheap, and decent access to trading. does that make what they're doing wrong? eh, i don't know. the business model isn't dissimilar to what's going on in the FX space. if it weren't for firms like these, the bar would be a lot higher to get into the industry, and well, that's exactly why they exist.

the funny thing, is that if they just got rid of the PDT rule, all of these firms would disappear over night. in fact, i would argue, the reason these firms exist at all, is because of it. gotta protect the idiots from themselves though i guess, rgt?
 
these prop firms would not disappear if the pdt rule was abolished
i guess your a newbe with that statement

the purpose of prop trading is to have access to 20-50-1 bp plus
it's all about leverage for stock traders

the retail leverage of 2-1 is not ideal for prop traders even with no pdt rules.




the funny thing, is that if they just got rid of the PDT rule, all of these firms would disappear over night. in fact, i would argue, the reason these firms exist at all, is because of it. gotta protect the idiots from themselves though i guess, rgt?
 
i was a newbie back when i started trading just before pdt was passed. at the time, i was trading with a small account at a retail firm. as a result of pdt, myself and many other traders were forced to look at other options, and made the move to one of these firms. if you know the history of the llc model, that's how they were popularized and came about. it's a different model than "prop" in general.

classic, calls me a newbie and then goes on to say retail leverage is 2:1. lookup the definition of irony when you google reg-t.
 
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