A day trader made a profit of $10 million while he was “practicing,” making trades on what he thought was a disconnected account.
Instead, apparently it was a live account.
But the company through which he was working found out and canceled his profits.
The report comes from Zerohedge, which explained that the dispute now is in court.
It was French daytrader trainee Harouna Traoré who used a demonstration version of the Valbury Capital brokerage platform “to become familiar with the basics of trading,” before eventually building up the courage to open a live, 20,000 euro ($23,200) account last summer for the occasional “real” trade, the report said.
Drawing from other reports, including the Financial Times, Zerohedge said the trader had opened the live account but thought he was working with practice software.
He ran up $1 million in losses, then realized his predicament.
“Now he wouldn’t be the first amateur trader to fall into a deep hole by trading without knowing what he was doing; however, he may be one of the very few who continued trading and managed to not only dig himself out of the hole, but to eventually build up an even bigger, $5 billion position – rapidly approaching Jerome Kerviel levels – in S&P futures while turning the original loss into a profit of more than €10 million! ”
But then, Zerohedge reports, “inexplicably,” he called Valbury to talk about what had happened.
The brokerage said he had breached his contract and canceled his profits.
“One almost wonders if Valbury would have ‘voided and cancelled’ the positions if Traore held a multi-million paper loss. Almost. Because with a profit on the books, what the brokerage effectively did was confiscate the funds,” Zerohedge reported.
“As one would expect, the day trader, who was recently fired by Reuters, was furious, and in January he sued the brokerage in French court, claiming breach of contract and negligence by the British brokerage and calling for it to pay him the €10 m he says it owes him,” the report said.
The company, the report said, denied any wrongdoing.
Valbury said it treated his trades as a “manifest error.”
“It is an absolute certainty that if the tables were turned, and if Traoire was the one who owed $10 M due to trading mistakes, it would be him that was being sued by the brokerage, not the other way around,” Zerohedge claimed.