Day trading is the simple act of buying and selling stock within a few hours of each other, hoping to make significant gains. Only about 10% of day traders are successful, but that doesn’t stop millions from trying. Successful day traders can practice extreme discipline and patience to make big pay-offs happen instead of the get-rich-quick stories that get passed around on the internet. While the world of day trading can be tough but exciting, there are plenty of bad actors that are just out to fleece you. Take a look at some of these examples to see what I mean.
SEC Charges Two Men Running Fake Day Trading School
Just this month the SEC filed fraud charges against Jeffery Goldman and Christopher Eikenberry for misleading investors about their trading school. The pair raised around $1.4 million from 260 traders who thought they were making trades on a legitimate platform. However, the two only provided access to training programs and used the investor’s funds for personal expenses and to cash-out early investors who wanted out of the deal. The platform was supposed to be a “state-of-the-art online stock trading infrastructure,” but in reality, the investors were trading with paper money while the pair made off with the actual funds. The SEC’s charges are still on-going for this case.
A Man Fraudulently Claims Unclaimed Property to Day Trade
This case of fraud stretched from 2012 to 2017, when an Oregon man began collecting unclaimed property from the California controller’s office. The man collected more than $1.5 million over the course of 440 transactions before he was caught. What did he do with all of his ill-gotten gains? He lost most of it day trading. The man was sentenced to two years in jail for mail fraud and money laundering and was ordered to repay the $1.5 million in restitution.
Short Seller is Suing Tesla for Stock Manipulation
Andrew Left is suing Tesla founder Elon Musk for stock manipulation in August, after the CEO tweeted that he was considering taking Tesla private. Musk said the plan was contingent upon shareholder approval, but the announcement caused an 11% jump in TSLA’s trading price. Left alleges that Musk tweeted the private company tweets directly to impact short sellers and that Musk had no intention of ever taking the company private.
Foreign Day Trader Banned from U.S. Markets
Regulators announced earlier this month that Simon Librati has agreed to a five-year suspension from trading on U.S. stock exchanges and a $400,000 fine after his firm accounted for 3% of the U.S. stock volume at its peak. Regulators say that traders for Librati’s firm engaged in rapid-fire manipulation that affected the price of numerous stocks over a several year period. Librati is accused of manipulating the American stock market from his overseas trading strategy. As you can see, the world of day trading has some interesting characters in it, so it pays to be cautious when joining this community. Never trust anyone you haven’t met and can vouch for in person and even then, you should approach every trade opportunity with your own due diligence.
