OptionSellers Investors Received News of a Catastrophic Loss Event, Now Facing Possible Collection Action from Money Owed on Margin Calls
OptionSellers recently informed investors that it had suffered a catastrophic loss event, according to recent reports under review by investor rights attorney Alan Rosca.
Alan Rosca, of the Rosca Scarlato LLC law firm, is investigating activity related to OptionSellers‘s alleged commodities fraud scheme. Investors who believe they may have lost money in activity related to OptionSellers‘s alleged commodities fraud scheme are encouraged to contact attorney Alan Rosca with any useful information or for a free, no obligation discussion about their options.
Following the announcement, the OptionSellers web site has fallen mostly dark. What is more, the firm allegedly sent an e-mail to investors stating that not only is their money gone, but that they are now possibly on the hook to INTL FC Stone, a multi-billion dollar financial services firm, who acted as the clearing house for OptionSellers, reports note.
This drop purportedly left clients with a negative balance and put them in debt to INTL FC Stone Inc., according to reports form the Wall Street Journal. Said accounts managed by OptionSellers were forced to be liquidated because of natural-gas volatility, according to a spokesman for INTL FC Stone.
FC Stone also allegedly allowed OptionSellers to trade investors’ IRA accounts on margin, a strategy which is usually not allowed in IRA accounts.
FC Stone allegedly also did not have sufficient procedures and controls to detect and prevent the large concentrations of naked natural gas call options and naked crude oil put options that resulted in investor losses and resulted in so-called margin blowouts to their accounts, the reports state.
The aforementioned e-mail which was sent to clients also goes on to state that OptionSellers lost a significant amount of their customers’ cash due to a short call position in crude oil which was so fast and intense that it overwhelmed all risk measures in place, the reports state.
OptionSellers’s Founder James Cordier Stated that the Firm’s Goal was to Take an Aggressive Vehicle and Manage it Conservatively, but Traded Risky Naked Options
James Cordier recently explained OptionSellers‘s trading strategy:
Our goal is to take an aggressive vehicle and manage it conservatively.
In reality, however, Cordier allegedly traded naked options rather than covered options, which reportedly increased exposure. Said unlimited exposure is what allegedly caused investors to lose all their cash more than two weeks ago, and its principals allegedly engaged in a negligent risky trading strategy that was purportedly unsuitable for their clients and thus led to an alleged breach of their fiduciary duties to them by putting their interests ahead of their clients.
James Cordier, the head trader and founder of OptionSellers, also posted a video online recently to explain the situation and included an emotional apology to clients stating that losses from poor bets on energy prices would likely lead to the demise of his firm, according to recent report.
Cordier’s video spoke of the drastic swings in the energy market that led to deep losses which will most likely affect up to 290 clients, each of whom held firm minimum investments of $250,000, the reports state.
OptionSellers also recently delivered a statement to clients which explains their turmoil:
Your account was caught in an extraordinary bout of volatility in the energy markets. In particular, natural gas prices experienced a parabolic move over the past 3 trading sessions. We had a short call position here that was on the wrong side of this. The magnitude of this move was so fast and intense that it overwhelmed all risk measures in place. It was like nothing we’ve ever seen.
The OptionSellers team also includes Rosemary Veasey, Matthew Donovan, James Cordier, Michael Gross, and Alicia Zedella, the reports note.
Finally, it is important to note that, as of the date of this article, there has not been a finding of liability as to the complaints or allegations mentioned in this article, unless otherwise indicated. Any reader should also read the original sources hyperlinked in this blog for accuracy, including any BrokerCheck report and/or record of any disciplinary or regulatory action. Those sources are incorporated by reference into the text of this blog, and are the governing materials in case of any inconsistencies or typos in this blog.
Securities Lawyer Investigating
The Rosca Scarlato LLC law firm represents investors who lose money as a result of investment-related fraud or misconduct and are currently investigating OptionSellers‘s alleged commodities fraud scheme. The firm takes most cases of this type on a contingency fee basis and advance the case costs, and only gets paid for their fees and costs out of money recovered for clients. Attorney Alan Rosca, a securities lawyer and adjunct professor of securities regulation, and has represented thousands of victimized investors across the country and around the world in cases ranging from arbitrations to class actions.
Investors who believe they lost money as a result of OptionSellers‘s alleged commodities fraud scheme may contact attorney Alan Rosca for a free no-obligation evaluation of their recovery options, at 888-998-0530, via email at arosca@rscounsel.law, or through the contact form on this webpage.
