David Trew, AVO and CMC Market's clients

David Trew's CMC Markets issues an AVO (Apprehended Violence Order) for client

Posted in Contracts for Difference CFD | Trading Services, Submitted by Trading Critic on Tue, 2008-07-01 08:06.
Electronic money trading - CFDs

Last weekend The Australian had a report about the CMC Market's Australia Managing Director - David Trew having to take out an AVO (Apprehended Violence Order) for a client. I've heard pretty bad things (rumours only) about CMC Market's clients and CFD trading. Nothing substantial. I guess this client took it to the next level...

It's funny how the news report about David Trew and the frustrated CMC Markets client was written. The report actually made the front page of the broadsheet's weekend issue with a massive photo of David Trew himself. The report infers that there is something fishy going on but doesn't really point fingers. It highlights how one client has taken steps to vent his frustration of losing money from trading. Then it highlights how CFDs is a little "shonky"/"shoddy" because it isn't allowed in USA, and it was used by a collapsed broker. and I agree that contracts for difference are "one of the riskiest financial instruments on the market". They are a double edged sword. The article ends in a slightly twisted note of how Mr Trew is living large while this bloke is obviously suffering financially.

The question is... what next? It is a highly "known" fact (well people always mention it but there are no numbers to back the statement up) that most traders lose money. With CFD's those losses are multiplied because of the massive leverage which is readily available. If you lose money from trading - especially trading CFD's you are personally at fault. You must accept that you, and you alone are at fault. Because you must do your own due diligence. CMC Market's have an easy to read PDS which explains the risks. If you can't handle the risks, or take steps to prevent those risks from eventuating, then don't trade. When the losses come and you can't accept it or handle it - don't trade. If you can't confidently take a risk on the market with your money - don't trade. If you haven't educated yourself about sound trading principles - don't trade. There is no such thing as a lucky gambler on the financial markets.

According to CMC, the client has made numerous phone calls, which were followed by two visits to CMC's offices and threats to staff and Mr Trew.

"The person came into the CMC Markets offices and was making some pretty severe personal threats against the managing director and his family," CMC spokesman Roger Marshall said.

Mr Marshall said the angry investor entered CMC's offices on Level 44 of the Sydney CBD's Governor Phillip Tower late last month and returned two days later to make similar threats.

"At that point we contacted the police," Mr Marshall said.

At Mr Trew's request, Sydney's Downing Centre Local Court on June 17 issued an interim apprehended violence order preventing the investor entering or approaching CMC's offices. The case will be heard on July 9.

CMC Markets is the biggest trader of contracts for difference - one of the riskiest financial instruments on the market. They are banned in the US and described by the Australian corporate regulator as more dangerous than a flutter on the horses.

Yet they are targeted at unsophisticated retail investors through magazine and television ads. They allow investors to bet on rises and falls in shares and indices using borrowed money but, most importantly, earnings and losses can be unlimited.

Many CFD operators use a similar model to that of collapsed stockbroker Opes Prime, which leaves its clients as unsecured creditors if the business fails.

CFDs have been outlawed in the US by the Securities Exchange Commission because, unlike most other securities such as shares and options, they are traded "off market", which is largely unregulated. The CFD industry estimates that more than $400 billion of CFD trades are carried out each year, representing about 15 per cent of trades on the equities market.

It is understood that the angered CMC client, feeling frustrated at losing so much money, went to CMC's offices to vent his frustration.

Mr Marshall said the investor had been a client of CMC Markets for "a long time". He said the money lost by the investor was "substantially less" than the $28,000 he claimed but he would not reveal the extent of those losses.

He said while Mr Trew had taken out an AVO against the investor, CMC Markets senior employees had invited the investor to "address his complaints in a safe, responsible manner". "Despite repeated attempts to understand the complaint, the specific details of the complaint are still unknown," Mr Marshall said. "The complainant has talked generally about trading losses he has made (and) has put in writing non-specific allegations and nominated what he assesses are his trading losses."

The investor could not be contacted yesterday.

Late last year, Mr Trew bought into Australia's most elite real estate market, splurging $25 million on a trophy mansion on Sydney's Wolseley Road in Point Piper - the most expensive street in the most expensive suburb in the nation.

Currently living in a far more modest four-bedroom terrace in the inner-Sydney suburb of Paddington - bought for $1 million in 2002 - the deal signals the extent of Mr Trew's wealth, apparently underscored by the proliferation of CFDs in the market.

The CMC chief is expected to do well out of the auspicious flexing of his wealth.

Although Mr Trew has yet to settle on the Wolseley Road property - with settlement due just before Christmas - a separate buyer has offered him $30 million for the property, according to the agent who brokered the deal.

"I have been asked by one prospective buyer to ask him if he would on-sell for $30 million and he said no," said Cassim Real Estate agent Bill Bridges.

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