749 replies to this topic

[VIResident]

Hold on. Didn’t we already know about Pareto’s scam software?

 

Light bulb switches on!

 

ParetoLogic Inc. — which operated as Speedy PC Software — was co-founded by the same partners behind another Victoria tech company, RevenueWire, that last week settled fraud charges with the U.S. Federal Trade Commission for US$6.7 million.

 

*BOOM* and not over yet.....

 

WAIT FOR IT. 

[Mike K.]

Oh yeah, we’ve known that from the start about Pareto.

Cap didn’t make the tie-in when they ran their “bunch of crooks” piece on RevenueWire after the FTC settlement, and never mentioned any of the Pereira’s like the TC did.

What we need to know is whether there are tech firms locally that are funded by the same individuals, even partially, and whether they have any control over the business direction or decisions. How many other local tech firms could be heading down the same path Pareto did?

[VIResident]

Wow.

 Notice the attempt to throw shade on the person who filed the class action? 

Great PR move. 

Put it before the courts, and it is then in the public's face on the public record. 

Except, Judges and general public are smarter than that, and it smells.

What has a past conviction got to do with a class action?  Why this particular person who brought the class action forward?  Could there possibly be a connection? And exactly who are those numerous independent reputable sources that said these firms were golden?  Were they investors?  Were they relatives?  What are they doing today?

[spanky123]

Oh yeah, we’ve known that from the start about Pareto.

Cap didn’t make the tie-in when they ran their “bunch of crooks” piece on RevenueWire after the FTC settlement, and never mentioned any of the Pereira’s like the TC did.

What we need to know is whether there are tech firms locally that are funded by the same individuals, even partially, and whether they have any control over the business direction or decisions. How many other local tech firms could be heading down the same path Pareto did?

 

Pareto shut down months ago. Even if the lawsuit is successful there will be nothing for the plaintiffs. 

[Jackerbie]

Big news out of Toronto. Sidewalk Labs (an Alphabet i.e. Google company) has pulled out of the Quayside redevelopment project. They had been working with the City of Toronto on a tech-focused redevelopment of the area as a testing ground of smart city technologies. They cite market uncertainty as the reason they're walking away for the 12 acre project. via https://medium.com/s...bs-9a61de3fee3a

[spanky123]

The thing is, we don’t know what was actually going on, whether they were trading currencies, or betting that the USD would go down in value and hedging their bets with USD earnings from clients.

Currency trading is very different compared to stock trading. It’s a beast I dabbled in but it’s very risky as its exposure is global and 24 hours a day. Lots of houses won’t even let you hold a position over the weekend without fees.

If whatever these guys were doing was like shorting, then they could be severely in the red with a sudden move like we saw in March. There’s no bottom loss, effectively, and you could be heaps of money in the red without warning if the commodity turns against you.

 

From what I read, EncoreFX did a reasonable job managing its own risk exposure. What tripped them up was the large number of their clients who refused/couldn't cover their positions when the currency swung rapidly in March. 

 

On that basis then it would appear as though the underlying business is sound and potentially a great deal for a buyer that can come in and acquire the assets. 

[spanky123]

Big news out of Toronto. Sidewalk Labs (an Alphabet i.e. Google company) has pulled out of the Quayside redevelopment project. They had been working with the City of Toronto on a tech-focused redevelopment of the area as a testing ground of smart city technologies. They cite market uncertainty as the reason they're walking away for the 12 acre project. via https://medium.com/s...bs-9a61de3fee3a

 

And the fact that the City balked at giving Alphabet ownership of all of the data!

[Rob Randall]

From what I read, EncoreFX did a reasonable job managing its own risk exposure. What tripped them up was the large number of their clients who refused/couldn't cover their positions when the currency swung rapidly in March. 

 

On that basis then it would appear as though the underlying business is sound and potentially a great deal for a buyer that can come in and acquire the assets. 

 

That's a contradictory statement. You're saying the business model is sound as long as the dollar stays relatively stable and the economy continues to hum along nicely.

 

I'm saying that's not a sound business model, especially for a company that advertised itself as more risk averse and able to avoid volatility. All it took was a week of bad numbers and the whole house of cards collapsed.

 

That's a sound business practice? Better name another building after Gustavson, the guy's on a roll!

[Victoria Watcher]

Big news out of Toronto. Sidewalk Labs (an Alphabet i.e. Google company) has pulled out of the Quayside redevelopment project. They had been working with the City of Toronto on a tech-focused redevelopment of the area as a testing ground of smart city technologies. They cite market uncertainty as the reason they're walking away for the 12 acre project. via https://medium.com/s...bs-9a61de3fee3a

of all the places to even try this Toronto seemed like an odd choice. too liberal and concerned about data use. seems to be this should be a Houston project.

[spanky123]

That's a contradictory statement. You're saying the business model is sound as long as the dollar stays relatively stable and the economy continues to hum along nicely.

 

I'm saying that's not a sound business model, especially for a company that advertised itself as more risk averse and able to avoid volatility. All it took was a week of bad numbers and the whole house of cards collapsed.

 

That's a sound business practice? Better name another building after Gustavson, the guy's on a roll!

 

I don't think that a large number of credible clients defaulting on their obligations would be something that most businesses would anticipate. 

[Victoria Watcher]

is there a chance that it only took one company to see a huge problem with the company business model and exploit it by defaulting on purpose to cause the collapse?

ie. who is coming out way ahead here? and could it be the founders themselves?

[Mike K.]

Now compare FX to the stock market. The latter has bounced back, while the CAD/US discrepancy continues to experience significant volatility and could go either way, depending on the economic policies of either country.

I used to earn USD as 99% of my clients were down south back in another life. There wasn’t a day I didn’t check to see what FX markets were doing.

[Victoria Watcher]

but did you hold your money in USD and only convert when you wanted/needed? that’s that these clients did or let gustavson do for them.

[Mike K.]

I wonder if what happened, is you have $50k set aside at a brokerage to pay USD commitments, but that $50k is invested while it sits there, with a 10x multiplier (you use multipliers in FX trading).

Normally you make a few bucks in an average week, or lose a few, but it’s all good. Then, suddenly, when you’re used to seeing a 0.01 or 0.1 move on a normal day, you’ve just lost your $50k and are deep in the red because the CAD fell 5 entire cents, obliterating your position, and the next day it’s still falling and you’re now “borrowing” money to cover the loss. FX trading is like a bad short, it’s got no end and you can fall into debt fast.

[Rob Randall]

I don't think that a large number of credible clients defaulting on their obligations would be something that most businesses would anticipate. 

 

But their whole shtick, the thing they said made them superior to their competitors was that they were the safer option in an era of increasing market volatility!

 

That's like an airbag company bragging that their automobile airbags are superior to existing ones as long as you don't crash over 50 kph.

[Mike K.]

Well they are/were, but the clients still have to make good on their obligations. If they don’t the house can’t carry those losses as it has its own obligations.

Finance is complex.

[spanky123]

is there a chance that it only took one company to see a huge problem with the company business model and exploit it by defaulting on purpose to cause the collapse?

ie. who is coming out way ahead here? and could it be the founders themselves?

 

There were north of 150 customers who defaulted.

[spanky123]

Well they are/were, but the clients still have to make good on their obligations. If they don’t the house can’t carry those losses as it has its own obligations.

Finance is complex.

 

If you read through the list of clients, EncoreFX wasn't doing business with shysters. Many of their clients were well respected brand names.

[spanky123]

but did you hold your money in USD and only convert when you wanted/needed? that’s that these clients did or let gustavson do for them.

 

To be clear, I don't know the details of what happened yet so I am just speculating. 

 

Lets say you are a Victoria company and you have a contract for $2M US of work over the next two years. Your costs (mostly payroll) are in CAD so you want to make sure that if the USD drops then you don't wind up short. You buy a forward contract to protect the downside of the USD. If the USD goes up then you have to cover that but it doesn't matter because you are getting paid eventually in USD anyways. What appears to have happened is that when the USD shot up customers couldn't/wouldn't cover their positions. 

 

The other thing that could have happened is that a customer purchases a forward contract and then their own customer doesn't pay them for the $2M worth of work so they reneg on their obligation to purchase the currency.

Edited by spanky123, 07 May 2020 - 09:05 AM.

[Victoria Watcher]

so why did the 150 default? I assume because just not paying was a superior option to paying (and losing all that money) and keeping on with gustavsons company. Reg in finance says it’s better to just not pay that and pull our arrangement. X 150.