Skip to content
Opinion
Matt Levine

Don't Steal Money From Day Traders Before They Lose It

Boiler room guys knew customers were going to lose their money, so they allegedly spent it themselves.

Why not just take the money instead?

Why not just take the money instead?

Photographer: George Marks/Hulton Archive

This post originally appeared in  Money Stuff.

There are apparently a lot of people who really want to day-trade stocks or currencies or cryptocurrencies with enormous leverage, and a lot of unscrupulous (legal, semi-legal or illegal) online brokerages that will let them do it to their heart’s content. Those people will mostly lose all their money, though I guess they’ll have a good time doing it. But it seems a little wasteful, if you are one of those unscrupulous brokerages, to take those people’s money and lose it for them. Sure you’ll end up pocketing a lot of it, in the form of commissions and fees on all the trading they do, but a lot of it will just be frittered away into the market and end up in the hands of smarter traders. From your perspective, it is a leakage, an inefficiency. Your dumb client comes to you with money and asks you, in effect, to help him lose it. You can do that; that is your specialty. But why not just take it instead?