The Brisbane man feels utter “disgust” that he fell for the “polished” sales process, describing it as the worst financial decision of his life.
The Brisbane man had paid a membership fee of $1000 to the brokerage business for them to buy and sell shares for him, where they would earn 1 per cent from each trade.
“It started to click as they were getting 1 per cent of every single transaction, so it was basically a no-lose situation for them really. If they sell stock of $10,000 worth of shares at $10, they are going to make a $100 brokerage and if it drops and sells they make $90 and if it sells and profit goes up they make $115, so the difference between the brokerage fees they get is quite minimal,” he told news.com.au.
They do this through a process of classifying traders as winners or losers, and then betting against the losers, according to online trading platform Global Prime, but many clients are largely unaware that it is happening.“So they would make a recommendation like Telstra is going to surge and they would sell all the big fish into Telstra and by doing that they would cause the share price to go up and by the time they called me its 3 per cent up that day and I would buy,” he explained.
When his portfolio was returned it had dropped 20 per cent in value and along with the profits he would have made if his best performing shares hadn’t been sold, he estimates he lost $50,000, describing it as a “disappointing financial decision to trust that crowd”.
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