Jun 2, 2016

SEC Charges Karen "The Supertrader" Bruton With Fraud

The filing is available here, but the summary is as follows:
Ms Bruton is a self-taught options trader who allegedly earned millions in profit with fraud. She gave a number of interviews that are available on youtube, and apparently is a known name for retain options traders.

SEC alleges that she would realize gains and roll over losses, but charge fees on realized gains. What I don't understand is how is this possible using listed options (she was in the business since 2008, why didn't she go bust? was it  incoming funds that kept her afloat?) and mark to market accounting? Didn't any of the clients ask to see actual account statements from their broker?

3 comments:

  1. Anonymous6/10/2016

    The ponzi scheme she was running kept going until either she ran out of funds or got caught ... many of us knew she was a fraud from the outset ... and had the courage to say so ... it is a shame she was so heavily promoted by Sosnoff and Tasty Trade ... who still after reading the SEC Indictment describe her as inspirational ... and justify her theft of fees on phantom profits on the basis that she simply did not pay her self enough in the first place ... go figure the morals of that one !!

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  2. Anonymous6/19/2016

    SPAN margin doesn't like it when you sell naked options in any significant quantity. Selling options can lucrative if you know or learn how to manage your margin risk. In her early trading years, when volatility was low, Karen likely did make some money selling options. But, according to her videos, she made hundreds of trades every month. What that means is, she was trying to learn the ropes of hedging her portfolio risk (covering her naked positions) against and relentless number of margin calls from her broker. There are safe ways to do this, if you know how. It takes years to master.

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