Court Case:Trader Tries Trading Millions on Demo Acct, Does it on REAL Account Instead. Can he Keep $$$ Gains?

Here’s a situation that’s hard to believe- a trader opens up a trading account in France with $23,000 and wants to practice using the brokerages demo account that he had been using to learn on.

So he engages in trading, but due to some crazy errors, he winds up trading on a live account and by the time he realizes he is NOT in the demo account, he is $1 million dollars in the hole. šŸ˜¬

Now this is pretty crazy stuff, since I have NEVER heard of ANY brokerage that would allow a person with just $23,000 in their account to be allowed to trade in the BILLIONS and incur so much debt- likely because they would soon be out of business with those type of lax safeguards.

Now once he finds out, you’d think he’d immediately call the brokerage and tell them the situation and that he wants no part of this…..and you’d be wrong.

Instead, he decides to continue trading and we get to some more crazy stuff happening: he actually does extremely well and winds up making $11.6 million in profit! šŸ’°šŸ’°šŸ’°

Once the brokerage learns about what happened, they decided to keep the money since the trader was supposed to be on a demo account. šŸ’ø The trader is now taking the brokerage to court claiming that the money he made should be rightfully his to keep.

So the question to consider is- who has the best claim to the money, the brokerage or the trader? What do you think?

I would reason it out as follows:

While on the surface it one could make a case that since he was trading, he should be able to keep it. But further analysis finds problems with this.

If he had lost millions, would he also claim the responsibility to pay it back, or would he claim he was free of liability because he believed he was on the demo account? The knife cuts both ways.

The key though is his account size. At only $23,000, it would be clear to all that he does not have the equity to be allowed to trade in the millions for a real account and therefore the brokerage should be on the hook for those losses. This also means they get to keep the gains as well.

Now having said that, I have these conclusions:

  1. Clearly this guy was either very lucky or knows what he’s doing and should be offered a trading job.
  2. Since it was the fault of the brokerage for allowing him to trade such large amounts on a real account, and he did earn them a nice amount, it would be nice if they gave him some type of payout since he could have also bankrupted them.

Here’s the article:

https://www.cnbc.com/2018/06/21/trader-builds-5-billion-position-after-realizing-it-wasnt-a-demo.html

 

 

 

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