Article taken from: The Investor’s WATCHDOG
Catastrophic Loss Event
On November 15, 2018, OptionSellers.com notified its investors in an email entitled “Catastrophic Loss Event” that it not only lost all their money, but that they would also owe money to Intl FC Stone for margin calls. According to OptionSellers.com, they lost a substantial portion of their investors’ assets due to a short call position in crude oil that, according to Optionsellers.com “was so fast and intense that it overwhelmed all risk measures in place.” It then informed investors that they have a debit balance in their accounts which they need to bring back to zero by paying INTL FC Stone the difference. So, in addition to trying to process the news all their money is gone, they also have INTL FC Stone breathing down their necks demanding they pay the money they owe for its margin calls.
Claims against OptionSellers.com and Its Principals
Tampa-based OptionsSellers.com touts itself as premier and highly experienced commodities options trading firm. The firm’s president and head trader, James Cordier, explained in a recent interview: “Our goal is to take an aggressive vehicle and manage it conservatively.” Unfortunately, it did not trade options conservatively. It traded “naked” rather than “covered” options, leaving investors subject to unlimited exposure. This unlimited exposure is what caused to lose all their money and more in the last few days. Thus, OptionSellers.com and its principals negligently engaged in a risky trading strategy that was unsuitable for its clients and breached its fiduciary duties to them by putting its interests ahead of its clients.
The Optionsellers.com team includes Rosemary Veasey, Matthew Donovan, James Cordier, Michael Gross, and Alicia Zedella. Optionsellers.com recently went “dark,” shutting down its website and Facebook and Linkedin pages, leaving us concerned about its ability to pay the millions of dollars of claims that are about to be filed against the small commodities trading firm.
Claims against Intl FC Stone
We believe (The Investor’s WATCHDOG) there are also potential claims against INTL FC Stone, the firm that executed the trades for OptionSellers.com. INTL FC Stone is a large publicly-traded company that was ranked 103 in the 2018 Fortune 500 list of largest United States Corporations by total revenue. We believe (The Investor’s WATCHDOG) INTL FC Stone failed to conduct proper due diligence of OptionSellers.com’s traders including James Cordier and Michael Gross who had multiple complaints filed against them in the past. We also believe (The Investor’s WATCHDOG) FC Stone failed to know its customers, allowing Optionsellers.com to trade options in IRA accounts on margin, a strategy generally not permitted in IRA accounts.
James Cordier video explaining the situation. (Watch the original video in OptionSellers.com YouTube channel here)
There are many, many examples of problems like this in the world of money management.Bill Cara