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, they reached through my ACH link to my checking account and drained that, too, leaving me with zero balances in all three accounts; (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, no one at Thinkorswim went to jail, no one was fined, and FINRA not only did not take action, but they did not even record the incident in their BrokerCheck database, which means no one (except people who read this) will ever hear about this crime.”
Indeed, it also means that we have no way of knowing how many other people have fallen victim to such unchecked corporate greed, and we cannot even estimate the probability that your account(s) might suffer a similar fate.
TAYLOR’S ADVICE TO ALL THINKORSWIM AND AMERITRADE CLIENTS:
“Your investment funds are NOT insured; FINRA does NOT have your back; and TD Ameritrade can and will do whatever they want. Their Asset Protection Guarantee is no more than marketing bunk designed to lure you into depositing more funds than you can afford to lose. “
“The only way to protect your assets from being stolen or misappropriated by this brokerage is to withdraw your funds while you still can, and close any link you may have set up to your checking accounts.”