It seemed like a great investment, in natural gas. But like many energy-based investments, there is a considerable volatility involved that’s an uncontrollable variable. In other words, you never know what may happen tomorrow, especially when trading options or using leverage.
Natural gas posted its biggest one-day percentage gain on November 14. The next day, it posted its largest one-day drop in 15 years. According to news stories, OptionSellers.com was betting that natural gas would continue to rise. When it didn’t, everything unraveled, and the company was forced to begin liquidation. Many investors borrowed through margin accounts, some with considerable amounts invested.
Tampa, FL-based OptionSellers.com was a commodities trading firm that claimed to be experienced in this type of investment. The firm’s president and head trader, James Cordier, told a recent interviewer, “Our goal is to take an aggressive vehicle and manage it conservatively.” Unfortunately, that’s not exactly what happened. Trading “naked” on margin instead of “covered,” the firm left its investors vulnerable to unlimited exposure, leading to the losses. An article explains that “OptionSellers.com and its principals negligently engaged in a risky trading strategy that was unsuitable for its clients and breached its fiduciary duties to them by putting its interests ahead of its clients.”
Additionally, news stories have alleged that Intl FC Stone, the firm executing trades for OptionSellers, did not conduct proper due diligence for the traders. This includes company president Cordier and partner Michael Gross who were previously the subject of multiple complaints. In 2013, they were both charged (with former firm Liberty Trading Group) nearly $50,000 for improper trading in a lawsuit before the U.S. Commodity Futures Trading Commission (CFTC.) FC Stone also failed to vet them, allowing Optionsellers.com to trade options in IRA accounts on margin, which is something not generally permitted in IRA accounts.
If you invested money in OptionSellers.com’s natural gas plan, you already know what’s happened. You got that email informing you that not only have you lost all your money, you probably owe some, too. Because you also got an email (called a “debit call notice”) from Intl FC Stone informing you that you’ll need to add funds to your account to bring it back up to a zero balance immediately. (There may also be a letter from Intl FC Stone via snail mail arriving in the next few days.)
In the email to the company’s investment customers, Cordier talked about a “rogue wave” that “overran our risk control systems,” resulting in a “catastrophic loss.” FC Stone is assisting the firm in its liquidation of all accounts.
The company’s website has “gone dark,” with only a blue background and the company’s address and contact information. In the email, Cordier assures the investors that they will be there to answer questions through the liquidation period.
Are You An OptionSellers Investor?
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