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Investors continue to reel from the news that OptionSellers.com founder James Cordier, CEO of the beleaguered Tampa based investment firm characterizing itself as a hedge fund, engaged in the high risk practice of trading in “naked” options. Cordier’s company lost hundreds of millions of dollars in a matter of days, as the volatile energy market turned on OptionSellers.com’s positions.

In a video to investors originally posted on YouTube earlier this week, Cordier characterized natural gas market conditions over the past week as a “rogue wave” that he could not navigate. As a result, INTL FCStone Inc., OptionSellers.com clearinghouse, liquidated the company’s accounts. OptionShares called the situation a “catastrophic loss event.” Worse, many of Cordier’s investors now owe more than they lost as the positions were “naked,” meaning there was almost unlimited downside risk when market conditions deteriorated. Trading in “naked” options is a high stakes strategy and it is possible that many of Cordier’s clients were not aware of the scope of the risk.

Our law firm is working with others across the country to investigate OptionSellers.com’s practices and investment strategy to determine whether clients were fully aware of the significant risk to their principal, as well as the very real possibility of owing more than was lost. Of major concern is whether OptionSellers.com, Cordier, or any of the other principals at the firm (Rosemary Veasey, Matthew Donovan, James Cordier, Michael Gross, and Alicia Zedella) are judgement proof (have any funds remaining from which victims may recover).

It may be possible to recover from INTL FCStone, OptionSellers’ clearing broker and the entity that executed Cordier’s trades. One contention is that INTL FCStone knew, or should have known, that Cordier and his former firm Liberty Trading Group were penalized almost $50,000 in 2013 for improper trading by the U.S. Commodity Futures Trading Commission (CFTC). There may have been other red flags that INTL FCStone chose to ignore. As such, our investigation is ongoing.

If you lost money through OptionShares.com, contact us today for a no cost consultation.

5 Comments

  1. Gravatar for Tom Haywood

    I am a reporter for Energy Intelligence and would like to know more about your effort to recover investor losses in this matter. The story has a Wednesday deadline.

    Looking forward to hearing from you.

    Tom

    1. Tom, while much of our strategy remains naturally confidential, one aspect we are looking into is how did victims first become aware of OptionSellers? Was there a referral network of independent investment advisors recommending that their clients work with OptionSellers.com? If so those third party advisors may have exposure if they were engaged in negligent referrals. Of course, others have talked about the clearing broker INTL FCStone. That is an option as well. The likelihood that OptionSellers and/or its principals are judgement proof is unfortunately high.

      1. Gravatar for Tom Haywood

        Hey Tom,

        Thanks for the response. Would the reason OptionsSellers may be judgment proof is the fine print on agreements folks sign (usually without reading) that state that this is a risky venture and you can lose everything -- though that is normally not emphasized in the pitch?

        Tom

        1. By judgement proof I mean lacking adequate financial wherewithal from which to collect. But you bring up a good point regarding liability and disclosure. We will not know what the pitch was until we get into discovery. Having spoken to numerous OptionsSellers clients so far, I can tell you they were not aware of the risk as it was downplayed by the principals.

    2. Gravatar for Paul korn

      If you sell options naked you are always at risk of having 100% or more of account lost. For example a freeze in Florida and Orange Juice keeps going “limit up”. If you’re short the calls, you may not be able to cover until you’re wiped out or worse. These were “high net worth investors” who should have understoood this. Yes Optionsellers should have covered sooner in hindsight. Michael Gross told the clients that losses on naked option were unlimited, but he, erroneously as it turnred out, thought he could manage the risk by closing early enough. The clients bought into selling a large quantity of naked options and need to suffer the consequences of a bad descision.

      Thanks

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