Is an Infamous UK Short Seller behind Plus500 Stock Drop, Calling It “a Scam”?
Forex Magnates discovered that British stock commentator Simon Cawkwell, known as "Prophet of the Plunge", sent an alarming message to
Two days ago, the stock price of CFD Broker, Plus500, suffered a considerable and sudden decline. The drop seemed to be inexplicable to analysts of the financial trading brokerage stocks segment, as no apparent reason was behind it. Forex Magnates has unearthed the possible source, a UK-based short seller with a history or driving down share prices of companies he targets.
Simon Cawkwell, nicknamed Prophet of the plunge and Evil Knievil by the British media, is a London accountant and stock market commentator writing on a stock tipping website. He reportedly makes his living by publicly denouncing companies whose share price, he believes, will fall and then short selling the stocks himself. Mr. Cawkwell is credited as having attacked the share price of many companies in this way over his long career and has admitted to running short selling raids on firms in the past.
Join the iFX EXPO Asia and discover your gateway to the Asian Markets
In a message sent by Mr. Cawkwell to the subscribers of his stock tips service, he targeted Plus500 and questioned the performance of the company, despite admittedly having no proof:
Suggested articles
How to Acquire New Clients Using Content MarketingGo to article >>
Mr. Cawkwell’s hypothesis may well have been the reason for the sudden drop in the Plus500 share price, and could be the first shot in a short selling raid on the stock. Speaking with Forex Magnates, Elad Even-Chen, Head of Investor Relations for the company, said that he has been receiving calls from investors asking if any negative announcement was made, explaining Tuesday’s drop.
However, the fact that the company’s financials are strong for the segment, with over $100 million in revenues last year and an EBITDA margin of 58%, seemed to reassure some Plus500 investors. The stock made a partial comeback, and this morning it was announced that JPMorgan Chase clients took advantage of the lower price to scoop up shares, giving them ownership of 14% of the company. Time will tell if it was indeed the short seller’s attempt at plus500 that stirred the minor havoc, and what their next move will be.
Update: The company’s Head of Investor Relations, Elad Even-Chen, shared with Forex Magnates’ reporters, “The assertion that our turnover and profits are provided by an associated company which is not declared as such is wholly wrong. We are fully transparent that our UK FCA regulated subsidiary is our principal trading subsidiary (alongside our Australian ASIC regulated subsidiary). “
Because he sent an email the shares dropped so much!!?
That does not make sense…
And he is right…. who is Plus500???
And why to buy a share of this company?
This company…’Is a drop of water in the ocean’,
Has nothing to offer…
Because he sent an email the shares dropped so much!!?
That does not make sense…
And he is right…. who is Plus500???
And why to buy a share of this company?
This company…’Is a drop of water in the ocean’,
Has nothing to offer…
There was a guy in Germany – called “the baker” – who did the same thing. Only he would short/buy the stocks in question before he spread his “predictions”. I believe he is still in jail.
There was a guy in Germany – called “the baker” – who did the same thing. Only he would short/buy the stocks in question before he spread his “predictions”. I believe he is still in jail.
Plus500 is audited by PWC. PWC is required by law to make spot tests when auditing the validity of customer accounts. Audtiors must even spot test and contact clients to confirm the validity of accounts. If the claim by Mr. Cawkwell should have any substance, PWC would have a massive problem, too. By the way: Plus5000 claims to have a unique Google marketing scheme, which allows them to decrease marketing costs significantly in contrast to competitors. Their average cost per client conversion is much lower than Alpari’s, FXCM’s and GAIN’s. I hope for them this claim is true. It’s worthwhile… Read more »
Plus500 is audited by PWC. PWC is required by law to make spot tests when auditing the validity of customer accounts. Audtiors must even spot test and contact clients to confirm the validity of accounts. If the claim by Mr. Cawkwell should have any substance, PWC would have a massive problem, too. By the way: Plus5000 claims to have a unique Google marketing scheme, which allows them to decrease marketing costs significantly in contrast to competitors. Their average cost per client conversion is much lower than Alpari’s, FXCM’s and GAIN’s. I hope for them this claim is true. It’s worthwhile… Read more »
Time to short this bucket shop either way , vol is dead. They b book everything and their payouts are high
I’ll be placing my limits on the next leg up
Time to short this bucket shop either way , vol is dead. They b book everything and their payouts are high
I’ll be placing my limits on the next leg up
Plus500 Investor Report is worth to give a look: http://cdn.plus500.com/media/Investors/Reports/Plus500_Annual_Report_13.pdf Segregated Client Funds: $32.8M (as stated on page 69, was hard to find!) Revenues 2013: $115.1M Ebitda 2013: $67.3M Active Customers: 85,795 Advertising Expenses 2013: $32.5M So basically they make in revenues 3.5x their clients balance, every year!! These numbers look like the perfect scam machine. The source of their revenues is simply their client’s money, which one way or another is going to loose “in the market” (which is themselves). And all this is continuosly sourced by a huge marketing machine ($32M!!), to bring more and more candid investors… Read more »
exactly
exactly
Plus500 Investor Report is worth to give a look: http://cdn.plus500.com/media/Investors/Reports/Plus500_Annual_Report_13.pdf Segregated Client Funds: $32.8M (as stated on page 69, was hard to find!) Revenues 2013: $115.1M Ebitda 2013: $67.3M Active Customers: 85,795 Advertising Expenses 2013: $32.5M So basically they make in revenues 3.5x their clients balance, every year!! These numbers look like the perfect scam machine. The source of their revenues is simply their client’s money, which one way or another is going to loose “in the market” (which is themselves). And all this is continuosly sourced by a huge marketing machine ($32M!!), to bring more and more candid investors… Read more »
Why would it be a scam. Client account lifetime is very short, and they use a good portion of their revenue for agressive marketing and a IB network to bring in fresh meat. If they run out of fresh meat, they wont make money.
Just read the report from IG – trading revenue vs. client assets is similar. Basically its how every retail fx firm works.
Why would it be a scam. Client account lifetime is very short, and they use a good portion of their revenue for agressive marketing and a IB network to bring in fresh meat. If they run out of fresh meat, they wont make money.
Just read the report from IG – trading revenue vs. client assets is similar. Basically its how every retail fx firm works.
If it is a scam why list as a public company and have your accounts open to more public scrutiny? Also the company has published results audited and verified by PWC surely they are paid to spot such scams or their reputation would be toast.
Another if this is a scam why are JP Morgan stake building (which incidentally has accelerated since the 2013 results were published)?
@FXO – I believe Jon is referring to Plus500.
With a daily expiry, the CFD is closed every day with positions closed at market price. Customers wishing to remain long need to re initiate a position with the new contract. It is similar to many commodity and equity index CFDs which follow their underlying future expiration and close at a specific period and don’t rollover to the next month.
@FXO – I believe Jon is referring to Plus500.
With a daily expiry, the CFD is closed every day with positions closed at market price. Customers wishing to remain long need to re initiate a position with the new contract. It is similar to many commodity and equity index CFDs which follow their underlying future expiration and close at a specific period and don’t rollover to the next month.
If it is a scam why list as a public company and have your accounts open to more public scrutiny? Also the company has published results audited and verified by PWC surely they are paid to spot such scams or their reputation would be toast.
Another if this is a scam why are JP Morgan stake building (which incidentally has accelerated since the 2013 results were published)?
Maybe rip-off is a better word than scam. If their business model is to bring in fresh meat that has to lose money to make them profitable, they should disclose it as is, at least to their investors. And the FCA should take some urgent measures on how all these companies use their name in their marketing material. The phrase “Authorised & Regulated by the FCA” is making all this companies raise and rip-off too much money. From clients that don’t know what the real game rules are, but trust a name like the FCA. All these clients, when opening… Read more »
Maybe rip-off is a better word than scam. If their business model is to bring in fresh meat that has to lose money to make them profitable, they should disclose it as is, at least to their investors. And the FCA should take some urgent measures on how all these companies use their name in their marketing material. The phrase “Authorised & Regulated by the FCA” is making all this companies raise and rip-off too much money. From clients that don’t know what the real game rules are, but trust a name like the FCA. All these clients, when opening… Read more »
@JB = Finally someone who has actually read the annual report and highlighted the conundrums. I think, the investor relations team at Plus500 has some issues to explain.
@JB = Finally someone who has actually read the annual report and highlighted the conundrums. I think, the investor relations team at Plus500 has some issues to explain.
On page 4 it is stated that average revenue per user (APRU) is 1.325. Based on the average client funds of $382, this sounds a bit unrealistic. I cannot find any hint on proprietary trading acivities. Are they running a B Book!!!???
On page 4 it is stated that average revenue per user (APRU) is 1.325. Based on the average client funds of $382, this sounds a bit unrealistic. I cannot find any hint on proprietary trading acivities. Are they running a B Book!!!???
Can leverage explain this, perhaps?
I agree with JB , they wont last long they dont have repeat clients. Which means they screw them really bad on their first deposit . Its typical of affiliate only firms . Which they are They will need a very long cycle of fresh equity coming in to sustain this share price.
I might layer a few limits myself on the next leg up
I agree with JB , they wont last long they dont have repeat clients. Which means they screw them really bad on their first deposit . Its typical of affiliate only firms . Which they are They will need a very long cycle of fresh equity coming in to sustain this share price.
I might layer a few limits myself on the next leg up
Bud every broker runs some form of a book even the STP opens take risk on swaps
Nothing wrong with that unless you mess with clients trades
However if your misleading and screwing clients then running a book your in trouble
Bud every broker runs some form of a book even the STP opens take risk on swaps
Nothing wrong with that unless you mess with clients trades
However if your misleading and screwing clients then running a book your in trouble
They don’t need to screw anyone. The sad fact is, that retail clients – by and large – just can’t trade, period. No need to mess with anything.
They don’t need to screw anyone. The sad fact is, that retail clients – by and large – just can’t trade, period. No need to mess with anything.
The revenue per client, relative to equity is very hard to achieve if it’s a 100% A book hedge model, unless they have amazing deals with the banks. So somewhere in the mix a b-book is being run…. Not so long ago, another broker claimed to offer 100% STP which was technically correct, as they just warehoused flow and sent it to a “friendly” prop shop, who paid back a rather large rebate. This worked until a regulator looked into this structure and the practices involved in running said B-book. Also, the (marketing) cost of acquisition isn’t that great, it’s… Read more »
The revenue per client, relative to equity is very hard to achieve if it’s a 100% A book hedge model, unless they have amazing deals with the banks. So somewhere in the mix a b-book is being run…. Not so long ago, another broker claimed to offer 100% STP which was technically correct, as they just warehoused flow and sent it to a “friendly” prop shop, who paid back a rather large rebate. This worked until a regulator looked into this structure and the practices involved in running said B-book. Also, the (marketing) cost of acquisition isn’t that great, it’s… Read more »
From the Investors Report: “The Group market risk is managed on a Group-wide basis and exposure to market risk at any point in time depends primarily on short term market conditions and the levels of client activity” “Not all net client exposures are hedged and the Group may have a substantial net position in any of the financial market in which it offers products” “The Group’s market risk policy incorporates a methodology for setting market position limits, consistent with the Group risk appetite, for each financial instrument in which the Group clients can trade, as well as certain markets which… Read more »
From the Investors Report: “The Group market risk is managed on a Group-wide basis and exposure to market risk at any point in time depends primarily on short term market conditions and the levels of client activity” “Not all net client exposures are hedged and the Group may have a substantial net position in any of the financial market in which it offers products” “The Group’s market risk policy incorporates a methodology for setting market position limits, consistent with the Group risk appetite, for each financial instrument in which the Group clients can trade, as well as certain markets which… Read more »
JP Morgan investing in Plus500 should raise alarm bells! Investment banks don’t have great track records with their stakes in retail brokerages…
JP Morgan investing in Plus500 should raise alarm bells! Investment banks don’t have great track records with their stakes in retail brokerages…
Whats the big deal. A lot of firms run b-books, its not illegal by any means. Oanda, fxcm, IG, all of the banks do. If you dont like the execution, change the firm. Its just takes a few clicks.
Whats the big deal. A lot of firms run b-books, its not illegal by any means. Oanda, fxcm, IG, all of the banks do. If you dont like the execution, change the firm. Its just takes a few clicks.
https://m.facebook.com/Plus500-complaints-779776888799201/?ref=bookmarks Don’t trust Plus500. They change your margin settings without telling you so the very second you drop below required margin you get wiped out. This wasn’t always the case. In the beginning I was given time to get logged on and feed my account then one day they changed the settings unbeknown to me and I was wiped out for thousands. They then change the way you see your money going up and down and replace that with “value” which is worthless. I have emailed now repeatedly for months asking for an explanation as to why my settings were… Read more »
https://m.facebook.com/Plus500-complaints-779776888799201/?ref=bookmarks Don’t trust Plus500. They change your margin settings without telling you so the very second you drop below required margin you get wiped out. This wasn’t always the case. In the beginning I was given time to get logged on and feed my account then one day they changed the settings unbeknown to me and I was wiped out for thousands. They then change the way you see your money going up and down and replace that with “value” which is worthless. I have emailed now repeatedly for months asking for an explanation as to why my settings were… Read more »
Plus500 is SIMULATED TRADING and does not actually mean you are trading with anything but a software program (an app) and its algorythms. Those algos are very sophisticated and ensure that your account is wiped in the optimal period in order to give Plus500 your funds. Second, when you ‘sign up’ and ‘trade’ with Plus500, you will ACTUALLY be trading on a computer server based in Cyprus PLus500 platform are — UNREGULATED TRANSACTIONS because they are EXACTLY the same as CASINO STYLE electronic slot machine. There is a lot more information about this, at this link: Plus500 – Fraud-money stolen,… Read more »