A confidential document extracting from a report by an...

A confidential document extracting from a report by an independent investigator commissioned by either ASIC or the Prudential Regulatory Authority reveals that the majority of large broking houses have been actively and continue to actively take positions against their own clients shorting the markets when in their favour.

A peek into an extract of the report provided briefly by a broker from a large Melbourne based Australian broker (not bank owned) showed that smaller clients taking positions using options are the most vulnerable to this form of exploitation.

In most instances they are sold options on shares held by the larger clients knowing full well the option will either expire out of the money or that it will be wiped out for the small client providing a positive cash flow for the larger client or themselves.

They trap clients by making some spectacular returns in the first few trades then hooking them with daily calls and 'tips' riding them for a bit then wiping out the investment when commissions exceed the capital invested.

Several of these firms now engage young Asian women to lure individual investors and small time businesses into the trap. The scam runs into several billion dollars if all the large brokerage houses are added into the scam. All banks and their brokers have been named so too has a large "Australian" stock broker the main culprit.