Plus500 tanks on Cable Car short position take-down

Shares in online retail-focused brokers Plus500 fell by more than a third on Friday morning as investors grew increasingly concerned about its finances, leading to shares in sector peer TechFinancials also suffering.Shares in Plus500 were down by 37% by 10:00 while Techfinancials was down 11%.Plus500 on Monday suspended more than half of its UK customer accounts due to new anti-money-laundering checking processes, with its house broker saying between a third and half of customer could leave. This led to the stock declining 36% on the day.Plus500 claimed around 50% of group revenues are derived from customers trading via its UK subsidiary, leading to heavy earnings downgrades a more than half of UK customers have been affected until the paper document review process is complete.As well as widespread media coverage, a note by US-based Cable Car Capital on Monday explained why it has taken a short position in the AIM company.San Francisco-headquartered Cable Car, which has written a 10-part take-down of the Israeli company, said it was short Plus500 with a price target of 76p, the company's stated amount of cash per share.A 10-part note from Cable Car's portfolio manager Jacob Ma-Weaver, a former McKinsey and Dodge & Cox analyst, dismissed Plus500 as a "bucket shop" that offers customers derivative interests without transacting on an exchange. "Shockingly, that's not illegal in Europe."He went on to note that Plus500's 2014 accounts had restated 2013 revenues, reducing them 80% from £63.8m to £12.8m."Plus500 has yet to explain this restatement or reclassification of revenues in a regulatory filing. That omission alone leads me to believe trading in Plus500 shares should be suspended until the company clarifies its accounts."Meanwhile, binary options platform providers TechFinancials, which floated in London in March, has seen its shares trade down more than 25% this week to below its IPO price for the first time.Originally placed at 27p, TechFinancials shares had climbed to as high as 48p in April before settling back somewhat.Forex website Leaprate reported that despite "no new news' on the company, nor anything regarding its OptionFair binary brokerage subsidiary, which accounts for about half of TechFinancials' overall business and financials, several City traders had cited "a change in heart toward upstart online trading companies following the problems experienced by FCA-regulated Forex and CFD broker Plus500".There is no reason to believe that any Plus500-like issue might hit TechFinancials (nor any other online Forex, CFD or Binary broker for that matter). However stock market investors often do things in a pack mentality. And that mentality seems to be heading for the exits right now Plus500