INVESTIGATION: OptionSellers.com And INTL FC Stone Lawsuit And Recovery Options
The Wolper Law Firm has been contacted by clients of OptionSellers.com, who experienced catastrophic investment losses during the week of November 12, 2018, and is preparing to file lawsuits. To this end, the Wolper Law Firm is currently investigating claims against Tampa, Florida based OptionSellers.com and its principals and traders, James Cordier, Rosemary Veasey, Matthew Donovan, Michael Gross, and Alicia Zedella. The Wolper Law Firm is also investigating potential claims against INTL FC Stone, which executed OptionSellers.com’s trades and also served as the custodian of client assets.
OptionSellers.com is a registered commodity trading advisor, offering clients individually managed portfolios. Clients of OptionSellers.com were required to open accounts at INTL FC Stone and provide OptionSellers.com with trading authority to transact on a discretionary basis. OptionSellers.com represents to its customers that “our goal is to take an aggressive vehicle and manage it conservatively.” Contrary to these representations, OptionSellers.com traded uncovered (i.e., naked) options on various commodities, including crude oil, natural gas, coffee, soybeans, gold and silver. These options trades were not properly hedged in order to provide adequate downside protection.
On November 15, 2015, OptionSellers.com notified its clients of a “catastrophic loss event,” which caused many clients to experience a complete loss of principal. In addition, INTL FC Stone has issued margin calls to many of OptionSellers.com’s customers, requiring them to deposit additional collateral in the accounts. Thus, not only did clients lose their principal investment in a matter of days, but are now required to come out-of-pocket significant sums of money to address the negative equity in their INTL FC Stone accounts.
OptionSellers.com has ceased trading and its website has “gone dark.”
The market event that caused the aforementioned losses was a “short squeeze” in natural gas and crude oil, whereby market participants “covered” short positions, exponentially driving up the price of natural gas and crude oil. OptionSellers.com was fully exposed with a large short call position in natural gas and did not take appropriate steps to close those positions. OptionSellers.com failed to properly hedge client assets and, instead, subjected their portfolios to a complete loss. Importantly, short calls are among the riskiest options strategies because it theoretically exposes a client to limitless risk.
In addition to claims against OptionSellers.com, there may be potential claims against INTL FC Stone based on, among other things, failure to follow applicable margin and maintenance requirements and allowing customers to utilize margin in IRA accounts, which is generally prohibited. Moreover, INTL FC Stone may have stepped beyond the traditional role of a prime broker and/or clearing agent when facilitating this speculative uncovered options strategy.
The Wolper Law Firm is interested in speaking with clients of OptionSellers.com as part of its investigation. We can be reached at 800.931.8452 or by email at firstname.lastname@example.org. The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters.