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Forum Post: Brokerage breaks silence against former customer and former partner

Posted 10 years ago on Sept. 24, 2013, 11 p.m. EST by TraderElvis (5) from Jersey City, NJ
This content is user submitted and not an official statement

New York – Back in 2007, Optionable was a fast track New York brokerage firm. Optionable commanded a sizable voice brokerage presence and had rolled out a groundbreaking electronic options trading platform that was gaining acceptance in the market. New York based, Bank of Montreal Commercial Markets (BMO CM) traded heavily through Optionable and had become their largest client. The New York Mercantile Exchange (NYMEX) invested $27M to secure a minority interest in Optionable after releasing a string of press releases that announced expanded services NYMEX offered in partnership with the firm.

And in a New York minute, it was gone.

According to a July 2013 statement released on Optionable’s website, the company claims that their reversal of fortune was no accident. Optionable asserts that each for their own reasons, their two most important partners profited by taking deliberate and destructive actions against them which has left Optionable permanently unable to generate revenue as a brokerage firm.

Why did they do it?

Optionable claims that the Bank of Montreal had been incurring trading losses while still reporting profits to the Securities and Exchange Commission. When the losses could no longer be concealed, the Bank hired a crisis management agency that advised the Bank to publicly blame Optionable, as their CEO had an unrelated previous criminal record, which would serve as a smoke screen for the Bank’s failed risk management practices.

Optionable also claims that NYMEX “piled on” to the Bank of Montreal’s bad acts so that they could launch a competing product through the Chicago Mercantile Exchange (CME) and thereby laid the groundwork for their own ten billion purchase by CME the following year.

Optionable states that they have filed significant counterclaims against CME and that they will not cease to fight for their beleaguered shareholders until BMO and CME are held accountable. October 2013 depositions of Bank of Montreal personnel have been scheduled.

Optionable's first public statement in six years can be found at www.optionable.com

Disclosure: I am an investor in Optionable. This blog does not offer advice on buying or selling any security.

7 Comments

7 Comments


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[-] 1 points by MyBrothersKeeper (-36) 10 years ago

http://blogs.wsj.com/law/2012/04/26/ex-optionable-ceo-sentenced-to-30-months-in-prison/ This should be in the urban dictionary as the definition of "thrown under the bus". I have no sympathy for investors of any kind for one simple reason. Investors make money of the backs of someone else's labor. If you don't do the work, you aren't due any of the benefit of the work. You got what you put in, nothing. Money is paper and paper doesn't make cars, bake bread, or harvest fields. Money is intended to trade the value of labor so when you have money you didn't work for, it has no real value. You invested nothing, you got nothing.

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[-] 1 points by TraderElvis (5) from Jersey City, NJ 10 years ago

Hello - My Brothers Keeper. Thanks for responding to my post and for providing the WSJ link. I have been following this one story for over 6 years, in part because I invested in the company, and in part because I believe an injustice was done. I'm familiar with the WSJ story you posted and the comments I left for the author who wrote it still appear on the WSJ site. (I've pasted them in below)

    3:04 pm May 2, 2012  Tom Flynn wrote :

It was a Bank of Montreal Requirement that the Market Risk Division, rather than the trader under review (David Lee), select the validation service for these sketchy high risk investments. To the great dismay of the BMO Market Risk division, Lee was allowed to insist on using Optionable to validate his marks rather than the industry standard valuation service that BMO Market Risk was denied the opportunity to use. Why did BMO allow this requirements breach when Lee’s trades were profitable, but then reverse their stance when Lee’s trades became unprofitable? It was the appearance of impropriety caused by Lee’s use of Optionable (whose CEO had an unrelated prior criminal record) more than any discrepancy between the industry-standard valuation and Optionable’s valuation that made Optionable look guilty when BMO needed a scapegoat to feed to industry analysts and investors when BMO announced their losses.
Disclosure: I am an Optionable shareholder. I have never worked at the Bank of Montreal although I share my name (Tom Flynn) with a Bank of Montreal executive marginally associated with this matter. I am not him.
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[-] 1 points by MattLHolck (16833) from San Diego, CA 10 years ago

Hello - My Brothers Keeper. Thanks for responding to my post and for providing the WSJ link. I have been following this one story for over 6 years, in part because I invested in the company, and in part because I believe an injustice was done. I'm familiar with the WSJ story you posted and the comments I left for the author who wrote it still appear on the WSJ site. (I've pasted them in below)

3:04 pm May 2, 2012  Tom Flynn wrote :

It was a Bank of Montreal Requirement that the Market Risk Division, rather than the trader under review (David Lee), select the validation service for these sketchy high risk investments. To the great dismay of the BMO Market Risk division, Lee was allowed to insist on using Optionable to validate his marks rather than the industry standard valuation service that BMO Market Risk was denied the opportunity to use. Why did BMO allow this requirements breach when Lee’s trades were profitable, but then reverse their stance when Lee’s trades became unprofitable? It was the appearance of impropriety caused by Lee’s use of Optionable (whose CEO had an unrelated prior criminal record) more than any discrepancy between the industry-standard valuation and Optionable’s valuation that made Optionable look guilty when BMO needed a scapegoat to feed to industry analysts and investors when BMO announced their losses. Disclosure: I am an Optionable shareholder. I have never worked at

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[-] 1 points by TraderElvis (5) from Jersey City, NJ 10 years ago

Thanks Matt for the assist on my formatting.

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[-] 1 points by MattLHolck (16833) from San Diego, CA 10 years ago

I copied to notepad and reposted

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[Removed]

[-] 1 points by MattLHolck (16833) from San Diego, CA 10 years ago

animals are leeches on backs of honorable plants creating energy from the sun

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[-] 1 points by TraderElvis (5) from Jersey City, NJ 10 years ago

Hey Matt - not sure how to respond to that - but thanks for sharing.

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