Say you run a trading platform and lots of your traders lose money. Why not just take their money for yourself instead of them losing it to the market?
For one, that’s stealing.
But apparently that didn’t stop Jeffrey Goldman, Naris Chamroonrat, Christopher Eikenberry, Ran Armon, Adam Plummer, and Yaniv Avnon from doing just that. They set up Nonko Trading as a purported offshore proprietary trading firm. It was organized to cater to U.S.-based day-traders, but evading the U.S. Broker-Dealer registration and regulatory requirements.
The Nonko group interviewed traders first. They targeted traders that appeared inexperienced or unsophisticated. Instead of providing these traders with access to a live securities trading platform, the Nonko team provided them with training accounts that merely trading. When these traders sent funds to Nonko to place securities trade orders, the orders were never actually sent to the markets. Instead, the Nonko team simply pocketed the traders’ money.
Their theory is that the traders won’t notice that you stole their money if they were going to lose it anyway. If you’ve see The Producers you know how this works. Your targets won’t know you’ve stolen you money if the targets thought they lost it.
If a trader stated to make money, they moved that trader from the simulation on the TRZ platform to the live NTRD version of the platform.
The Nonko crew apparently left a trail of messages pointing out their misdeeds”
the current frame work [sic] now with TRZ is that we interview the
traders first and make sure they are complete newbs before putting
them on TRZ, while at the same time, we have a close watch to see
which account is starting to make money, at any point in time they
start to show signs of profitablity [sic] we quickly switch them
over to a NTRD account (live)
with this new platform, we will use the same process but as we
expect to have smaller deposits and more new accounts, we will
have to figuire [sic] a more stricter way to flag “game” accounts,
we havent [sic] gotten that far yet
The Nonko Group lured day traders by offering high margin limits (20:1) and small commissions. They also put together written TRZ Guidelines on which traders should be selected for the fraudulent TRZ platform.
During the initial phases of the training accounts scheme, Goldman commented to Chamroonrat on Skype: “trz group down 3k…every trader down. How come part of me feels good and part of me feels bad?!?!??”
You feel bad, because you’re stealing their money.
In The Producers, the scheme goes awry when the production makes money. For Nanko, it went wrong when a newbie trader on the TRZ version called the underlying provider for technical help. The help desk was confused that the trader thought his simulation was real. Once the provider saw the problem it emailed all of the TRZ traders telling them it was just a simulation.
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