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[voronov]

Senior Sales Trader and Associate Director at IG Markets (Australia)

Broker sued for losing $171,000 kitty
The Age November 9 2002
By Leon Gettler

A broking operation now owned by the Kerry Packer-backed Challenger International is the latest to be hit with a lawsuit from an investor for alleged losses.

Investor Michael Paproth and his company MJP Holdings are suing Challenger's broking arm, Challenger First Pacific, over claims that investments made more than two years ago by the private-client operations of Credit Suisse First Boston had resulted in them losing all of an $171,000 investment. Challenger acquired the CSFB business at the end of last year, and Challenger managing director Bill Ireland said the allegations focused on events that took place before then so Challenger carried none of the liabilities.

"We have been indemnified against all claims," Mr Ireland said.

The impending court battle follows the landmark $1 million court judgment against Perth-based stockbroker Hartley Poynton earlier this year after a bitter legal dispute with a former client.

Mr Paproth's lawyers are Slater & Gordon, the law firm that secured the judgment against Hartley Poynton.


Mr Paproth yesterday lodged a statement of claim in the Victorian Supreme Court alleging the broker had, from June 1999 to December 2000, traded more than $8 million worth of shares "for the dominant purpose of creating brokerage fees, rather than for the advancement and protection of the best interests of the plaintiffs".

Mr Paproth, who was 22 at the time and working as a real estate agent, had invested $171,000 with CSFB to trade on the market. Most of the money had been borrowed.

"During a period of excessive trading and rampant churning activity, the broker charged brokerage fees of $152,967," the statement said.

"The reckless trading activity was characterised by an irrational method of acquiring and disposing stocks akin to 'gambling' and was highly concentrated in speculative stocks including an over-exposure to the technology sector in disregard of any diversification or stop-loss strategy."

The statement of claim said that Jason Andor, then a CSFB employee, had told Mr Paproth he would make huge financial returns with Mr Andor using his "skill and judgment to pick margins".

Mr Andor had allegedly told his client he could make money for him by trading on the broker's credit facility and "that it was normal and prudent business practice for brokers to undertake trades on credit even though a client did not have the capacity to pay for the stock".

The statement of claim says that Mr Andor claimed he was one of the most credentialled and experienced sharebrokers at CSFB, that he was "sixth nationally" and that he had been head-hunted by CSFB to look after clients such as Kerry Packer.

But according to the statement, these were false claims. It said Mr Andor was not a well regarded or experienced broker and that he was not head-hunted to look after high-profile clients.

It is believed that Mr Andor no longer works for the firm.

[Mazzie]

I wuold like to add to the story, IG Index are dirty they do hunt your stops ,i had heard so much about this from other traders,but i blamed myself for an other bad trade,so i put an order to open at such a level went for a coffee came back trade had triggered and lost could not see how on my charts called them up,i was told to look at tick charts,the next time i had put an order pending i returned to my shock it had triggered again i was down again so i put another order higher with bigger lot size and would you believe market went up,i closed my trade for a small lose and cancelled pending order be careful people theres alot off sharks out there what chance have we got