Subject: 4-606

August 30, 2010

I think that there needs to be more oversight/regulation of brokers in their trading activities on behalf of clients. I personally have lost in excess of $100,000 between three brokers who were trading options for me. One individual churned my account with the result that the brokerage firm dismissed him and reimbursed me a portion of commissions, but left me with about $35,000 in losses. Another broker, a few years ago, told me that the country was headed for a recession, as he had observed the same circumstances earlier in his career. Having said that, he did not take any action to protect my account - merely let two mutual funds go to their bottoms, then sold them. The same broker violated a standard rule of trading - when the trade goes against you, get out. He persisted in holding on to a put sale position in which the underlying took a huge drop, stuck with it to expiration, resulting in my purchasing the shares, and then the stock continued downward, which he eventually then sold for a $35,000 loss. The third broker placed several credit spreads, and twice violated the "rule" of closing a position when it goes against you, letting the trades go to expiration, resulting in a $20,000 loss and a $12,000 loss.

I completely understand "the risk of trading options". I have traded options for myself, and find them less risky than trading stocks. When a broker does option trading for a client, any trading for that matter, I feel that he/she needs to be responsible for the trades, just as a building contractor or most any one else in business has to be accountable for his mistakes. Just choosing the wrong trade is not a mistake, it's the handling of the trade, when it becomes obvious the direction the trade is going, that becomes a mistake. When large amounts of money are lost on one trade because of negligence, or inattention, on the part of the broker, that, to me, is inexcusable, and therefore think that there should be some kind of regulation govening such behavior.

Lynell Wellman