Nonko Trading, SCAM OR NOT?

Emmett Moore Emmett Moore April 30, 2015 Proprietary Trading Firms 54 Comments

***Updated and Complete Review dated June 20, 2015***

In the past 48 hours, a post from Karen Gentile, the president of DAS Trading was released onto social media that claims that one of her competitors, Nonko Trading is a scam. To anyone holding a Nonko Trading account, or anyone affiliated with the Nonko trading group, this must of been a terrifying event. Karen Gentile is a major player in the trading technology industry. She has been around for a very long time, and her trading platform, DAS is very well respected within the industry. She is a licensed NYSE and EURONEXT partner, as well as a licensed NASDAQ technology partner. The exchanges have quite literally given her the keys to the back end of the proverbial code kingdom. Her trading platform acts as the intermediary between the customer, the data provider, and the broker dealer. Let me take a moment to explain how these pieces work together.

The retail customer, meaning you and me would use Karen Gentile’s DAS software and trading platform to execute trades. The information that we see on the screen are price quotes and data that comes directly from multiple exchanges, this information must be parsed, organized and displayed in such a manner where the retail trader can make use of this data. And then the final piece of the puzzle is the broker dealer connectivity. The broker dealer is where the trades are recorded and reported to the exchange. All of these parts must work together smoothly, efficiently, and without fail. DAS has been around for 10 years and is a proven company that delivers a quality product that works. The point of this, is to lend credibility to the fact the Karen Gentile really, really knows what she is talking about. And when she makes a bold statement that could cost her a great deal in reputation, then one should take great notice.

A Conversation With Karen Gentile, Founder Of DAS

On April 28, I spoke with Karen on the telephone regarding Nonko. I wanted to hear directly from her, in her own words, exactly what she knows about Nonko and why she believes that Nonko is a scam. She then laid out, piece by piece, the alleged scheme and how it was perpetuated. Admittedly, her depth and grasp of market structure and the implementation of technology is very impressive, thankfully I recorded our entire conversation. This allowed me to go back over the conversation and make sure that I fully understood the allegations against Nonko.

Karen’s allegations are quite simple. Prior to November 2014, she licensed the use of her software DAS to NONKO TRADING. She explained that Nonko Trading represented themselves as a prop trading firm, and at the time of the licensing they did in fact have a broker dealer relationship to clear trades with at least one prime dealer. She alleges that Nonko, at some point in 2014, with its master account status on DAS, would then issue simulated accounts to certain traders. What does this mean? This means that a person that deposited money with Nonko and then began to trade, were only trading on a simulated account. And since most traders lose, especially the smaller accounts, then Nonko was just letting these small accounts trade and Nonko would hopefully profit from the losing traders activity. In effect, Nonko was acting as the broker of record. None of the trades were ever sent to the exchange to be executed. And since Nonco knew that the great majority of traders fail, then Nonco decided to just let them fail on a simulator, and then pocket the money that the trader had deposited into their account. When DAS discovered the alleged fraud, they immediately terminated access to the DAS platform, for all Nonko customers. She then released a statement on RipOff Report that included just a very few details of the alleged fraud. Considering that anyone can randomly report a fraud, her story never really caught traction. However, it did cause enough traction on the lowest of low level social networks: Twitter. And anyone with the brain the size of a peanut knows that Twitter is the end point for all sorts of gossip and anonymous sniping. Once the allegation of fraud hit twitter, then Nonko easily countered the claims with their own well information campaign. Nonko’s social media strategy worked, Nonko survived.

Karen was kind enough to spend a great deal of time with me on the phone, away from the noise of social media, and she convinced me, in that moment that Nonko, through the use of their homemade Logix platform, was perpetuating a massive fraud. In a nutshell, she believes that if you open an account with Nonko and then use the Logix platform, then you essentially are only using a simulator. The allegation is that Nonko is offering a “video game” that simulates trades using real market data. And since the vast majority of traders fail, Nonko is simply allowing them to fail and then pockets the client monies. Karen Gentile is convinced that Nonko is simply selling access to an expensive simulated video game piece of software named Logix.

Who Is Nonko Trading?

The answer is not very clear. In speaking with Jeremy Newsome at Real Life Trading, whom I reviewed months earlier, and was able to verify that he actually does trade (profitably), explained to me that Nonko is owned by a group of traders that obsess over privacy. Jeremy has been trading with Nonko for three years, and he seemed very comfortable with the ownership at Nonko. Jeremy was able to clearly identify that the owners of G6 Trading are actually partial owners of Nonko. The owners of G6 Trading are Yaniv Avnon and Ran Armon. On April 28, I was able to get Ran Armon on the telephone for an interview (all recorded), he clearly stated that his role in Nonko was as a prior junior partner, and that his main duty was advising on technology. And he had requested that Nonko remove any reference to him because he felt that these rumors might damage the reputation of his trading education firm, G6 Trading. Ran was clearly rattled by the latest attack from Karen at DAS. I think that he wanted to say more, and that he wanted to defend Nonko, but he was stuck in an awkward position of having to defend the entire firm of G6 and Nonko at the same moment. My line of questioning became increasingly tough and I attempted to press Ran into a corner. We spoke for nearly 40 minutes. I believe that he responded in a truthful and candid manner. He wanted to say more, but he just kept asking to me over and over…”if Nonko is so bad, then where are the customer complaints?” and “Can you find even one person that has been harmed by Nonko Trading?” His point is valid. Where are the people that Karen at DAS is alleging were scammed? You would think that the internet and blogosphere would be riddled with victims.

A Victim Of Nonko Trading

As I sat at my desk, scouring the internet, looking for someone that had been harmed by Nonko Trading, I kept thinking that Karen Gentile from DAS must be correct! I just needed to find these victims. Surely someone must exist. Next I called to T3 Capital, the largest prop trading firm in the United States. I spoke with Dave Flynn for over 30 minutes, he said that he was sure that Nonko was a total scam. I asked if he could identify anyone that was an actual victim. He had lots of old war stories about other firms from years prior, but nothing on Nonko. I asked him if he had ever even heard of Nonko, he said NO, but he was sure they were a scam. My gut feeling was that there must be a scam somewhere, my god, as a former scammer myself, surely I could root out the fraud. This had to be a huge fraud. Right? There is so much blood in the water, at some point I am going to find some arms and legs.

Finally I Find A Victim!

Finally, on April 29 I receive an email from Karen Gentile. She explained to me that one of the victims of the potential fraud was none other than Chris Grosvenor from Day Trading Power. As it turns out, I had reviewed Chris Grosvenor’s Day Trading Power trading room. I couldn’t believe my good fortune. Why? Because through an entire month of video recordings, I was able to confirm that Chris is an honest guy, operating an honest trading room. His trades are all real time, all verified, and the dude is flat out honest. He is a rarity in the trading education world. Finally, I had my star witness that Karen Gentile at DAS had been referring too. My next step was to call Chris, and get the straight story on Nonko Trading.

A Long Talk With Chris Grosvenor

On the afternoon of April 29, 2015, I get Chris on the phone. I asked him if he had heard any of the drama between DAS and NONKO. He was surprised and had not heard anything as of yet. Next, I went over the allegations that Karen at DAS had laid out, line by line. We spent the next 35 minutes talking over every little detail. After telling Chris that Karen from DAS had mentioned that he was a victim and at one point traded on a training account, he was quite surprised. He did indeed confirm that he was and still is a client that trades with Nonko, but insisted to shed light on the situation. Chris explained that 2 years ago, Nonko’s exchange server had blocked him from buying anything less than 100 shares at a time, so Chris put in a request with Nonko to have that rectified, and Nonko said they couldn’t but they could try to open him a new account. Chris confirmed that the new account did not let him trade less than 100 shares anyways, and when he attempted to make a single transaction on his new account starting with the TRN abbreviation that there seemed to be a delay with the order placing, so he requested that Nonko put him back on his old account and he wouldn’t trade anything less than 100 shares from then on. So, Chris in fact never actually traded on a training account. When I spoke with Karen at DAS recently she confirmed that the account he was using was actually a demo account, but did not go into great detail explaining the nuance like Chris did.

While speaking with Chris, I was sure that he was going to slam Nonko Trading. Actually he was quite the opposite. After his short lived incident with the possible training account, his initial reaction was that he was a bit confused, but the more he thought about it, he became convinced that perhaps this was simply a mistake on Nonko’s part. In fact, he never closed his account with Nonko. It has remained open to this day. He continues to withdraw funds every month from his live trading activities, the orders that he placing on Nonko’s Logix are showing up on the public order book, and has not had any problems since the initial incident. He also explained that several of the owner/partners of Nonko had taken the time to fly to Canada to meet with him directly. Chris explained that he was very impressed with the meeting and felt like Nonko was doing everything in its power to improve the Nonko Logix trading platform. Chris, whom I know to be honest and rock solid, is now actually recommending that customers sign up with Nonko. In effect, he is putting his well-earned reputation on the line and remains convinced that Nonko is real. I was amazed at what I was hearing from Chris, this information was in direct contrast to what Karen at DAS had told me.

One of the questions that I was not able to get answered from Karen at DAS is at what date did she become aware of the alleged scheme, when was she able to able to actually confirm the scheme, how many people were potentially defrauded, and a list of potential parties that were defrauded.

LOGIX vs DAS

I sent several emails to Nonko requesting information regarding the allegations of fraud from DAS. The representative at Nonko explained to me that after DAS terminated their contract and access to the DAS platform, that they felt betrayed and helpless. With only a whisper and an allegation, Karen Gentile of DAS had wantonly nearly destroyed the company. Most companies would of packed up and closed down. But Nonko decided to saddle up and fight back. With their reputation damaged and the company teetering, they plunged their resources into developing their own trading platform. A trading platform that could do nearly everything that DAS could do, but at nearly half the cost. An impressive and costly achievement, but were they really able to create their own trading platform complete with exchange inter-connectivity in such a short period of time?

Basically, this fight has devolved into a David vs Goliath situation. On one hand, you have the giant Goliath DAS, which has a fearsome and unblemished reputation. On the other hand, you have the scrappy little David LOGIX that seems to be pushing back, gaining traction, and perhaps even winning the fight for customers. With this in mind, as I read the letter from Karen at DAS, I thought that for sure that NONKO was dead. But the more I think about this situation, perhaps the letter was more an act of desperation to utterly destroy her opponent in one last attempt. For if NONKO survives this latest negative publicity onslaught, perhaps shortly, David will actually defeat Goliath. This analogy probably seems to simplistic, but perhaps this is exactly what Nonko claims, a cheap smear campaign from a larger competitor that is seeing customers flee to the smaller rival. Honestly, I dont know.

A Nagging Question

One of the things that upsets me about Nonko is the fact that they will not clearly identify ownership of the company. Nobody will claim that they are a principle. We know that G6 is a partial owner, with one person living in Canada and the other person in Israel. We know that the trading platform actually works and is tied into the exchange for at least data. But one thing we do not know is whether there is an actual prime dealer, or broker of record. Existing securities laws require that every single trade be tallied and reported to the exchange. All of these supposed trades must be reported and a paper trail exists somewhere. But Nonko simply refuses to release any information. Who knows, maybe Nonko Logix, as Karen claims, is just an expensive video game.

Moving Forward

So the big question as to whether Nonko is a scam simply cannot be answered so easily, and we definitely cannot answer this question via social media signals. There is no right or wrong answer, at least yet. We have no victims. All we do know for sure is that Nonko definitely will open United States based customer accounts, which of course is a NO NO because of existing regulations. However, I have a long list of other prop day trading firms that have devised all manner of verbal gymnastics in order to avoid the day trading rules and take US based accounts. And my personal opinion is that the regulations are complete bullshit. If a person wants to take their money, that they earned and wants to buy and sell stocks, then why should they be denied access simply because they do not have a $25,000 minimum account? And why make a person take a series 7 or series 56 license? People looking to day trade stocks are not looking for a new career as a stock broker. They just want to buy and sell stocks and they need the additional leverage of a prop firm. My personal opinion is that ridiculous regulatory overreach and big government policies are actually hurting the small investor by forcing smaller investors into the unregulated fringes. Even the United States based prop firms that comply with SEC regulations, like T3 Capital think that the regulations are complete bullshit. I know this is a side show argument from whether Nonko is a scam, but perhaps now you can see that the current regulatory structure forces small prop firms like Nonko into a position of having to remain quiet and cannot access the legal system for relief, when they themselves are actually operating on the fringe of the legal system.

The Bottom Line

The bottom line is that the existing regulatory structure of requiring a series 56 or series 7 is forcing the trading community to create its own solution. A company like Nonko is simply filling the demand of giving the little guy access to opportunity. However, in the situation of DAS vs Nonko, I feel that we should let the market decide if Nonko is a scam or not. Perhaps someday soon, Nonko will disappear and Karen will be proven correct. We just dont know. But one thing that we can do ask the trading community to weigh into this argument. And the question that everyone needs answered right now, IS NONKO A SCAM? No, please dont leave a bunch of stupid opinions below on my comments section…leave that crap for Twitter and Facebook.

You have a couple of options to reach me. Either call me directly on my “NONKO” phone number at 760-933-8195. Made sure that whatever information that you provide, or opinion that you share must be confirmed with a screenshot or .pdf confirming that at some point, you actually currently have or currently have an account at NONKO. Your identity will remain confidential.

The other option is to email me at the following email that I set up specifically to handle Nonko inquiries: nonkohotline@gmail.com. Please include in your email as much information as possible. Were you scammed? How were you not scammed? How have things worked out for you? After I receive the information, I will contact you via email to confirm and verify that you are currently a Nonko customer, or at some point in the past, you have had an account with NONKO. Your identity will remain confidential.

Posting The Results

After the first 20 accounts that I can confirm, I will post an update to this post. And then subsequent information in additional posts will be added as more information trickles in. Please participate. I will not be using any social media.