Imagine waking up one morning, logging into your online investment account, and discovering that someone had accessed your account, locked you out, and opened a series of illegal trades that were diminishing in value by thousands of dollars per day.
Now imagine telephoning your online brokerage to report the crime, only to discover that an employee (Peter J. Klink) had intentionally done this “as a hedge against additional losses.”
“But my accounts were holding only long options whose values could only go to zero”, Taylor told us, “And this risk manager had now created unlimited risk in the accounts. In other words, the account balances could now go infinitely below zero.”
Below are screenshots of the Options Pricing Models’ projections for the specific trades Mr. Klink opened in Taylor’s accounts.
(Click on the image for a larger view)
The trades were losing value exponentially. “I was frantic. I called Thinkorswim at least four times that day, and everyone I spoke with was disrespectful, curt, and one even cursed and hung up on me when I asked them to roll one of my long positions forward for significant net credit on the roll yield.”
“By the third day, my account balances were plunging even faster. I contacted senior officers at Thinkorswim, who told me that if I didn’t send in additional funds to cover the losses already incurred, they would continue to trade my accounts ‘as we see fit’ (i.e. maliciously). I called FINRA, the purported industry ‘police’ to help me stop the crime, but they said they could not order the broker to take specific action, and that I would have to submit an after-the-fact arbitration claim. So much for FINRA’s Investor Protection.”
“This nightmare 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. What had taken me 40 years to build up was wiped out in as many days.
WHAT SORT OF BROKER DOES THIS TO A CUSTOMER, FOR ANY REASON?
“I initially took some consolation in the fact that Mr. Klink’s actions were unquestionably illegal, and that his unauthorized trades would be backed-out”, said Taylor, “I never imagined that I would soon learn the harsh reality of being a victim of broker fraud and regulatory corruption.”