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 (not his real name due to litigation), a self-directed 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 more than $3,000 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.”
“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 losses already incurred, they would continue to trade my accounts ‘as we see fit‘ (i.e. maliciously).”
Taylor called FINRA and asked them to stop what he called a crime in progress, but FINRA told him they did not have the authority to order the broker to take specific action.
“What??!?”, Taylor exclaimed, “The Financial Industry Regulatory Authority has no authority over the firms it is regulating??!? This is absurd.”
This pattern continued for nearly six weeks, at which time Thinkorswim finally closed the last of the illegal trades at a net debit of $185,000. “Bam! Just like that. What had taken me 40 years to save up was wiped out in as many days…intentionally!”
“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) after Thinkorswim took all of the funds from my investment and retirement accounts, it somehow manipulated the ACH link I had established to withdraw all of the funds from my checking account, too; (b) there was no Victim Recovery Fund to help me get back onto my feet, (c) there was no SIPC insurance coverage because Thinkorswim did not go out of business, and (d) unlike Madoff and his associates, no one went to jail, no one was fined, no one was ordered to return the funds they stole from me, and the incident was not even recorded in FINRA’s BrokerCheck database, which means no one (except readers of this blog) will ever hear about this crime.”
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; and 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. Do not entrust any more funds to TD Ameritrade than you can afford to lose.”