OPTIONSELLERS AND INTL FC STONE LAWSUIT
OptionSellers.com Investment Loss Recovery Center: If you lost money due to OptionSellers.com’s risky trading strategies, the securities attorneys at Peiffer Wolf Carr & Kane will FIGHT to help you recover your losses. If you are an OptionSellers.com investor who invested in their natural gas plan, we are actively investigating claims and representing clients against James Cordier, Rosemary Veasey, Matthew Donovan, Michael Gross, Alicia Zedella, and INTL FC Stone.
OptionSellers.com clients were required to open accounts at INTL FC Stone and provide OptionSellers.com with trading discretionary trading authority. Tampa-based OptionSellers.com is a registered commodity trading advisor that offers clients individually managed portfolios. According to OptionSellers.com’s website, prior to being taken down on November 16, 2018, it conveyed to its customers that “our goal is to take an aggressive vehicle and manage it conservatively.” Unfortunately for its investors, OptionSellers.com traded “naked” options on various commodities. James Cordier, President and Head Trader at OptionSellers.com, has been an outspoken proponent of using naked options to trade in the volatile energy market. In numerous interviews and articles, as well as his own book, Cordier, touted the potential rewards and promised consistent results.
According to Bloomberg, “[a]n option gives someone the right, but not the obligation, to buy or sell a commodity or security within a predetermined time period. Options are said to be naked when they’re unhedged. If a market moves violently against a naked short options position, it raises the prospect of almost unlimited risk.“
OPTIONSELLERS.COM | CATASTROPHIC LOSS EVENT
On November 15, OptionSellers.com emailed its investors with a message entitled “Catastrophic Loss Event.” Within this email correspondence, OptionSellers.com delivered the worst kind of message: Not only had it lost their investors’ money, but those same investors would also owe more money to INTL FC Stone for a margin call. As represented by OptionSellers.com, they lost their investors’ money because of a “short call position in natural gas” that “overwhelmed all risk measures in place.” To make matters worse, OptionSellers.com informed investors that they need to come out-of-pocket by paying INTL FC Stone to bring their account balances back to zero.
People like to sell options rather than buying options because the odds of making money are better, said Jack Scoville, vice president at Price Futures Group in Chicago. However, as we saw with natural gas, that’s not always the case. You can get into a situation where the market is getting away from you pretty quickly.
The Catastrophic Loss Event that caused these losses is known as a “short squeeze.” Specifically, there was a “short squeeze” in natural gas and crude oil. Participants in the market “covered” short positions, causing a spike in the price of natural gas and crude oil. At this moment, OptionSellers.com had a large short call position. Thus, OptionSellers.com didn’t hedge investor assets and investors experienced a complete loss. This type of strategy is one of the riskiest because it exposes an investor to an unlimited amount of risk.
CLAIMS AGAINST OPTIONSELLERS.COM AND INTL FC STONE
Based on our years of experience and the facts of this catastrophic disaster, Peiffer Wolf Carr & Kane believe there are potential claims against OptionSellers.com, the principals of OptionSellers.com, and INTL FC Stone. OptionSellers.com’s risky trading strategies were likely unsuitable for their clients. Moreover, it is likely that OptionSellers.com and its principals breached their fiduciary duties by placing their own interests before their clients. As INTL FC Stone was the firm that executed and cleared the trades for OptionSellers.com, we believe they likely failed to conduct proper due diligence and failed to know its customers by allowing trading strategies that were inappropriate for risk tolerance and stated objectives. Moreover, INTL FC Stone allowed OptionSellers.com to trade investors’ qualified funds, like IRA accounts, on margin. This trading strategy is generally not permitted in qualified fund accounts. Finally, it is likely that INTL FC Stone did not have sufficient procedures and controls in place to prevent this type of catastrophic loss.
While writing naked options may sound outrageously aggressive and even frightening to some, if it is done correctly, one should be able to sleep very well at night, Cordier and Gross wrote in their book. The downside, of course, is that the market potentially can exceed your risk parameter.
FREE CONSULTATION | 504-523-2434
Peiffer Wolf Carr & Kane is currently investigating claims for anyone who has invested with OptionSellers.com. We are currently representing clients against James Cordier, Rosemary Veasey, Matthew Donovan, Michael Gross, Alicia Zedella, and INTL FC Stone. Contact Us Today by calling 504-523-2434 or by filling out an online Contact Form for a FREE Consultation. Concerns about possible broker misconduct and investment fraud are serious, and we are committed to fighting on behalf of investors.
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