Imagine waking up one morning, logging into your online investment account, and discovering that an unknown person had gained access to your account and opened a series of new, illegal short trades that were diminishing in value by thousands of dollars per day.
Now imagine calling your brokerage firm to report the unauthorized access, only to be told that an employee of the Firm had intentionally opened the new discretionary trades in your non-discretionary accounts, allegedly to “hedge against further losses.”
“It was unbelievable”, said Ron Taylor, a self-employed Options trader who had accounts at Thinkorswim by TD Ameritrade. “My own brokerage was trading against me, inside my accounts! Even their own trading platform was reporting that their trades were illegal.
The employee who opened the new trade positions was Peter J. Klink, the Firm’s purported Risk Manager. “There was no way this guy could have been ‘hedging against further losses'”, Taylor said, “…because the Options Pricing Models were projecting that his trades would be diminishing in value by nearly $4,000 per day, based on the passage of time, a certainty.”
Below are the Options Pricing Models’ projections for the specific trades Mr. Klink had opened in Taylor’s accounts.
(Click on the images for a larger view)
“My account balances were spiraling downward. I was frantic”, Taylor said “I called Thinkorswim at least four times that day, and each person I spoke with was more curt and disrespectful than the previous one. When I asked one of them to roll my long options to a later expiration date to take advantage of the roll yield, he barked to me, ‘listen, I got other things to do…I don’t have time for this sh*t’ and hung up.” [ed: listen to the conversation here].
“By the third day, my account balances were plunging even faster. I called senior officers at Thinkorswim, but all they said was that unless I sent in additional funds to cover the debit already incurred by their illegal trades, they would continue to trade my accounts
‘as we see fit‘ (i.e. maliciously).”
“I called FINRA for help in stopping this crime in progress, but FINRA said they could not order the broker to take specific action. Only that I could file an arbitration claim for any losses. So much for Investor Protection“, Taylor added.
Peter Klink’s illegal trades at the end of the fourth trading day.
“This pattern continued for nearly six weeks, at which time Mr. Klink closed the last of his illegal trades for a net loss of more than $185,000. Bam! Just like that. What had taken me 40 years to save up was wiped out in as many days.
“I felt the same gut-wrenching sickness that Bernard Madoff’s victims must have felt upon learning that their futures were gone”, Taylor told us, “Except for me it was worse, because (a) there was no victim recovery fund to help me get back onto my feet, (b) there was no SIPC insurance coverage since the company did not go out of business; and (c) unlike Madoff and his associates, no one at Stinkorswim went to jail. No one was fined; no one ordered to return the funds they stole from my accounts, and the incident was not even recorded in FINRA’s BrokerCheck database, which means FINRA allowed this broker to blatantly violate the law.”
TAYLOR’S ADVICE TO ALL THINKORSWIM AND TD AMERITRADE CUSTOMERS: “Your funds may NOT be safe at this firm! Your funds are NOT insured; FINRA does NOT have your back; TD Ameritrade’s Asset Protection Guarantee appears to be just another empty ‘promise’ designed to lure you into placing your funds under their custody and control. They have FINRA in their back pocket, and in my case FINRA allowed the firm to violate Federal Law. And unless you have hundreds of thousands of dollars to throw at a lawyer, there is a very real chance that you may never see your funds again.”