James Cordier: Tragedy or Laughingstock? (Part 3)
Posted by Mark on September 16, 2019 at 07:28 | Last modified: March 5, 2019 12:03Speaking of mass deception, as I did regarding James Cordier and Optionsellers.com, I found a December 2018 press release from a legal firm that states:
> Cordier marketed himself as a leading market expert. He co-
> authored a book titled “The Complete Guide to Option Selling.”
> In May, he penned a bylined article in Futures magazine about
> the perils of trading in the gas market.
He cautioned about the perils of trading natural gas before getting blown up by it himself?! My eyebrows are raised…
> In a 2013 lawsuit filed by the U.S. Commodity Futures Trading
> Commission (CFTC), James Cordier, president of OptionSellers.com,
> his partner Michael Gross, and former firm Liberty Trading Group
> were charged nearly $50,000 for improper trading.
Any fines or citation from the CFTC are never good to see and certainly do not engender trust.
> Separately, FCStone was involved in its own natural-gas options
> controversy in 2013. As reported in a CFTC notice in May [2013],
> the CFTC fined the company $1.5 million for a failure “to prevent
> an unchecked customer from taking grossly excessive risks” and
> the brokerage ended up with losses of $127 million.*
FCStone was the brokerage used for Cordier’s trades. Again, this is not good to see.
As these details incrementally cast doubt on Cordier’s enterprise, we must not ignore the fact that the legal firm itself has underlying motives: new business through representation of damaged investors.
The press release continues:
> Investors in this situation should seek legal counsel now to
> protect their rights and avoid being wiped out twice. Ironically,
> you have a hedge fund here that didn’t hedge. Worse yet, the
As mentioned in Part 2, this was not a hedge fund but rather separately managed accounts (SMA). I believe hedge fund risk is limited to no more than the total investment. If that is true, then I am surprised to see an attorney make this obvious mistake.
> brokerage firm that cleared and executed these trades is now
> seeking to collect an additional $35 million in margin calls
> from the same investors that just got wiped out … and also
> putting the squeeze on them to relinquish their legal rights.
> This has turned into a real double-whammy nightmare for
> investors in OptionSellers.com natural gas scheme.
Yes on the double whammy, but if all this was agreed and consented to beforehand as SMA (see fourth paragraph of Part 2), then I really don’t see what liability James Cordier has.
I do see some exaggeration on the part of the legal firm here. The waters are muddy, and as with so many stories and lawsuits, it’s hard to know which side (if) is to blame.
* I wonder how much FCStone will be fined this time since Cordier was clearly taking “grossly excessive risks”
in losing $150M for his clients.
Comments (2)
I was a client of Liberty Trading. I was fairly quickly wiped out. I blame myself for that to a large extent since I should have withdrawn all my money as soon as they lost 20-25% rather than hope they could recover.
I’m assuming that they ran option sellers the same way they ran liberty. It was not a hedge fund but they acted as brokers who traded client accounts. For them to make money, they had to charge high fees. To make the numbers work, they weren’t able to trade as far away from the strike as one would of oneself, and they pushed margin more than I would. In my post mortem analysis, I made changes to their “system” and have been somewhat successful. If I had not been the victim of both high-profile thefts of futures accounts–Corzine at MFGlobal and Wasendorf at PFG Best, how’s that for luck?–I’d be waaaaay better off right now.
Btw, I was able to trade through the natty disaster by having small positions, dumping them (although not fast enough), and then loading up when the volatility was astronomical to recoup most of my loss.
Sounds like you’ve made a nice recovery. Keep up the good work!