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Maverick Trading announced Thursday that it will be able to keep working with California traders as long as they trade through their own corporations or LLCs, despite the newly enacted Assembly Bill 5. The firm has over 500 traders.
"The real effect is on our traders who elected not to incorporate their trading activities," Maverick CEO Darren Fischer told FOX Business. "On a practical level, those traders are taking their focus off trading their portfolios and devoting their time to determine their individual paths forward."
Maverick's flexible relationship with its traders means they can step back from trading during a major life event like a marriage or illness, Fischer said. Treating them as independent contractors isn't always a perfect situation though, he said.
"If we have to treat our traders as W-2 employees and they go through a life event and they can’t or shouldn’t trade, we’re left with very poor options," Fischer said. "There will be a pressure on the trader to keep trading since the firm would still be responsible for wages, payroll taxes and benefits. Do we have the trader keep trading during these times and risk preventable losses? Do we lay the trader off during a trying time, adding insult to injury?"
AB5 attempts to give California workers more stability by encouraging companies to offer them full-time jobs and traditional benefits instead of gig work. Fischer said he thinks the law will be harmful to small business and innovation because of how restrictive it is.
If similar laws are enacted in other states (New York appears to be considering such legislation), Fischer said Maverick would extend its California policy to those traders.
"Maverick Trading has invested over 20 years building its reputation as a proprietary trading firm. We pride ourselves on the training, support and capital we provide to our traders," Fischer said. "Had we not found this solution ... those traders would have lost the access to the capital we provide them to trade, the ongoing coaching, supervision and support that keeps our traders focused on consistency and risk management, as well as the training and continuing education we offer our traders to help them achieve success and grow as traders."
The company almost had to cut ties with California traders.
"For a brief moment, we were presented with a decision whether or not to release our existing California-based traders as well as to discontinue accepting new California traders," the firm said in a press release Thursday. "Our traders are the firm's greatest assets and we refused to believe that the only option was to cast out a segment of our traders simply because of where they lived."