What next for GTSA?
What Next for GTSA?
(Pinched from a Blog.)
Savage is saying what you'd expect to hear him say in the circumstances. It now looks though that despite the fact this only manifested itself in February the problem was probably known about in Q4 (if not Q3) of 2007 and rather than come forward the NWT/GTSA business looks to have taken steps to distance themselves from GTE so they could perform a legal extrication from the mess and leave it with their GTE customers. Not the sort of behaviour I'd be looking for from a broker.
Whilst they will argue that there are no such issues possible with the GTSA business I would be worried as a GTSA customer that if any problem manifests itself then the directors will first act to preserve themselves before ever giving any sign to clients, and clients will once again get stuffed. In phychology terms this is more likely to be a behaviour they will repeat, versus a once off. This is analgous to cutting that losing trade - laudible from a business perspective but not if you happen to be a customer ...
It is rumoured that a number of wealthy/influential GTE clients are not particularly happy that the legal separation between GTE and GTSA is valid or demonstrable and may come directly after the directors of Purple/NWT/GTSA in SA in some form or other. One of the ways that may manifest itself is in some form of lien over the SA businesses/capital, which, though would have to be fought over in the courts could place a constraint on the ability of GTSA to conduct business in exactly the same way as the GTE deficiency in regulatory capital essentially forced it to cease operations. That in turn could represent a threat to the funds and/or trading of GTSA customers despite the fact that currently (from a margin/client call perspective) no such threat is perceived to exist.
So, while the SA business is insistent it is separate and robust, it is only so until you see otherwise. You will not know you've been bitten until there are teeth marks in your backside - exactly the way GTE clients experienced it.
I would also have another concern - given around 300 pissed off GTE customers and the known mediocre quality of the platform it is plausible that someone may take it into their heads to simply run interference in the SA business (I believe there are some Russian customers in the mix, people known for taking alternate approaches to problem solving).
From what I've heard about bugs in the platforms, back end, web site security, feeds, etc, it is not particulary well secured or QA'd. I've even seen discussion on social networking sites from people who worked on the platform (NDA anyone?). Not so long ago, these folk would send you an e-mail with both your account name and password in the clear - surely an indication that the people developing the system had little experience of industry standards in securing a platform such as this.
Would make you wonder what other kinks are in there; probably the only reason it has not been cracked yet is because it has not drawn attention. I have heard of one situation going back (urban myth?) where a client claims they were inadvertently logged into some other clients account due to some platform error.
An interesting thing you might observe on the platform; though supposedly real time I've been told by a customer of GTE that the clock on the platform was usually slightly lagging real time giving a slight delay in the feeds, possibly up to two minutes. This led to the unusual phenomenon that immediately after market close but just before platform close you could conduct trades at whatever post close prices happened to come through. You would have to ask yourself what reason might have existed for such a delay. Anyone every place late bets on horses?
Finally, you would have to ask yourself, why with Smith and Williamson as Administrators of GTE, have Grant Thornton been employed to look specifically into the conduct of the former directors and whether or not there was any impropiety in the running of the business.
Plenty to be getting on with.
