Binary options broker EZTrader recently released some operational and financial numbers for the first quarter of 2016 and they are far from being good. The numbers were released at the holding level. EZTD Inc is the holding company operating both binary options trading brands EZTrader.com and EZinvest.com. However, most of the company’s revenues are derived from the EZTrader brand so looking at the numbers at the holding level is quite similar to looking at the the broker level.
Tough Q1 for EZTrader – $3.3 million loss and several litigations
In its official released, EZTD Inc disclosed a net loss of $3.3 millions for the first quarter of the year, a pretty big amount considering the broker generated a revenue of $7 million during the same period. In order to cover for these losses, the broker recently raised outside private capital of $6 million. It only represents a small capital buffer if the broke continues to generate such quarterly losses.
Adding to these financial problems, EZTrader also faced some legal and financial litigations over the period. The broker was required to pay more than $600k to Dutch soccer club Feyenoord Rotterdam relating to the early termination of a sponsorship agreement between the two entities. Even worse, EZTD also acknowledged the fact that it received a ‘Wells Notice’ from the US Securities and Exchange Commission (SEC). If the SEC is able to demonstrate that EZTrader violated certain US federal securities laws, the litigation cost could reach levels far beyond the broker’s capability. The SEC is known for imposing tougher sanctions than the ones imposed by European regulators.
We prefer to stick to our recommended brokers
As you can guess from the comments above, we are not entirely confident about EZTrader’s financial sustainably and will pay a clear attention to the follow-ups from the SEC investigation. We prefer to trade with brokers that have demonstrated a solid financial sustainability for years and that are compliant with regulators around the world. For your information, 24option and AnyOption, which are both members of our ranking of the best binary options brokers in Europe, are the oldest brokers still in activity in Europe. With more than 7 years of experience for both brokers, they have been demonstrating their ability to innovate while keeping high standards of financial sustainability and security.