Quote:
Originally Posted by Pharaoh
Hello Dustin,
I'm glad to see you here telling your side of the story. I do have a few questions:
1. If this allocation issue took profits for some client, are there some clients running around overjoyed since they made a LOT more than the were supposed to? If so, shouldn't one or two of them have popped up here at some point? Alternatively, if everyone agreed to correct reallocation, why not send out a note to those who made too much to refund it to a cash pool that would be used to compensate the ones who lost? They might even be able to take a tax deduction on it if this was structured correctly.
2. Offering to trade for no fees until losses are recovered is very generous. On the other hand, wouldn't you think that sending out advertising for some rather expensive services to those who took large losses was perhaps not the wisest marketing move?
3. As far as I can tell, a percentage of the high water mark is the closest there is to an "industry standard" for fees charged by forex account managers. Some charge additional fees per trade, others don't. Some charge an account setup fee, others don't. Some charge a percentage of the account as an annual fee, others don't. If you're making 1/2 of a 90% annual increase in account value, I'd think that the 2% annual maintenance fee would be so small in comparison that you wouldn't bother and instead would use the lack of other fees as an item in a "Why let me trade for you?" FAQ.
4. Shouldn't IBFX incorrectly allocating trade volume among accounts be fully actionable and sufficient grounds for you to launch a complaint against them with the NFA as well as a civil suit? In this thread alone, I see a number of people who would be happy to join in.
5. Did IBFX place the same burden on their other IBs/Account managers or where you singled out? If so, isn't this also grounds for action? If not, what happened to accounts run by other account managers in your position? What did the NFA think of this requirement, be it solely for you or for you and some or all of the other account managers?
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Allocation issue:
When the trades were entered some clients were entered with more lots than they were supposed to be entered with and others with less. When my agreement was terminated all positions were in the negative. The issue is some were way negative because they had too many lots for their account size and others were far less negative because they had very little in the market.
What ended up happening in many cases people just closed down with the negative position so all clients with the exception of a few that followed my direction took a loss of some kind. With that in mind no one is going to give additional money up especially in this cicumstance. Only the accounts that I was able to continue to manage (my own and my families accounts) came back to profit with the exception of the few that followed my advice and held through the swing.
Regarding the Marketing:
Many requested discounts on my product for what had happened. The Bank Flow product is obviously split with Jonathan Silver so I cannot force him to discount his service for my managed account clients so I simply offered it to clients less my take. Regarding the RSS I also have other parties involved and again they are not going to discount there portions and I would not expect them to. I didnt send out a promotional email it was an offering based on the traders request for some sort of consesion and I was not trying to make money on this.
It is possible that some received promos but that would have been because they were on our mailing list and were receiving them as part of a company wide promo. You also have to realize that Traders Network AKA [url=http://www.fxdealerselect.com]FX Dealer[/url] is a seperate company from the Signalling Services and really are not related in any way other than I happen to own portions of both. The emails didnt come from fxdealerselect which is the management company they came from the signalling company.
Regarding the 2% fee:
The 2% may not seem like much and to the individual trader it doesn’t affect them much however when you have millions under management collectively and you have a down year this two percent pays for the staff and accounting that is necessary to continue to run a business. I don’t like to have down years and haven’t really experienced one yet but I know the reality of trading and because i am a longer term trader I have been in trades for over a year at times and it is just good business practice. I never said I wasn’t in the business to make money.
Regarding a class action:
The suite you speak of against IBFX is a possible route however I can assure you they have the best attorneys on their side and we could likely end up spending more than what was lost before getting close to a ruling.
Regarding the policy:
It is my impression that the ruling was pointed directly towards me. This is an assumption based on the fact that I was able to get them to adjust this date back several times. I can’t imagine my negotiating alone would have impacted a companywide policy. However all IB's sign documentation stating that they will abide by all existing and future policies.
All good questions however I can assure you my attorneys have already considered all these options you have brought up.
Kind Regards,
Dustin Pass