USA Stock-Lending Company Reviews (Equities First Holdings EFH, Squadron, and Qilin)
As a broker working in the securities industry for over 15 years I wanted to publish a behind-the-scenes review of the common lenders, their typical deceitful and fraudulent practices, and my experiences working with them.
A lot of what you hear about these overseas companies is smoke and mirrors with promises of millions in quick commissions for brokering deals. The reality is much more grim.
The top players are Equities First Holdings, Squadron, and Qilin.
I have extensive experience with the first two, and some experience with the latter. I will lump all in the same category because they all appear to work off the same model.
First Glance: Each company at first comes across as well managed and organized. They make you sign a referral agreement, promising you certain percentage of direct commission from deal and some basis points from their own pocket for bringing the deal to them.
Each has some marketing materials for clients, which largely say the same exact thing. Hard to believe terms, quick funding, and everything under the sun.
First Glance review: EFH: 6/10 Squadron: 4/10 Qilin:3/10
Interaction: You would think that each would have reliable communication, but it usually takes 2-5 days to hear a response for a term sheet request from each company. Sometimes their responses are one-word answers, often misspelled, and unprofessional. No leads or training is provided. The only time you get their attention is by bringing a good borrower they can scam.
Interaction review: EFH: 3/10 Squadron: 1/10 Qilin: 2/10
How these companies operate: The basic model of EFH, Squadron and Qilin is simple: sucker in gullible perspective clients with too good to be true terms, promise them quick funding in one or two tranches, absolutely no hedging (they love to waive this carrot), once shares are transferred the stock is sold and borrower is funded using the proceeds of the sale.
Every savvy broker knows this is what happens as it’s no secret amongst Hong Kong, Malaysian, Chinese and Singapore brokers. If you get to know the reps of each company well enough some will even tell you out-right what they do.
In 99% of the cases the borrowers/sellers never receive funding in one tranche, but usually in 4-10 tranches spaced out over a period of 4-12months.
The contracts contain sneaky terms that allow these companies to lower the LTV and change funding at will. Whatever they promise is NEVER what the borrower gets. EVER!
Most executed contracts state a 3-4% interest and LTV of 60-75%. If a borrower is lucky he will see an LTV of 25% when all is said and done.
Operational Review: EFH: Fraud Squadron: Fraud Qilin: Fraud
Commissions: EFH and Squadron deserve their very own special place in hell as both stiffed me out of over USD $500,000. They didn’t fund the full loan sum (because they never do) and so they use a referral agreement exit clause not to pay their brokers. I spent 3+ months and thousands in expenses brokering each of the deals. Qilin paid a quarter of the commissions owed to me in span of 12 months.
Commissionl Review: EFH: Fraud Squadron: Fraud Qilin: 2/10
Lawsuits: Each has faced or is facing half a dozen lawsuits for scamming naive Asian investors. Do a deep google search for yourself. The lawsuits are very easy to find. Each company uses tricky hard to understand legal language to trick the borrowers into letting them sell their stock, despite arduously telling each customer they don’t sell.
Lawsuits Review: All commit fraud.
Final Word: Please stay as far away from these companies as possible and use reputable lenders such as known banks. Affiliation with these companies will get you embroiled in lawsuits and charged as accomplice to wire fraud.
Hope this saves someone years of headaches and sleepless nights.