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And Now For Something Unexpected - The SEC Probing Market Manipulation By Advanced Trading Systems
From Bloomberg:
Sept. 10 (Bloomberg) -- The U.S. Securities and Exchange Commission is “rigorously” investigating whether traders are using technology to manipulate markets, the agency’s enforcement and inspections chiefs said today.
The regulator is probing suspected “market manipulation based on complex use of technology and advanced trading systems,” said SEC Enforcement Director Robert Khuzami and acting examinations director John Walsh in testimony prepared for a Senate Banking Committee hearing. They mentioned the inquiry among a list of pending cases, also including unspecified Ponzi schemes, hedge-fund abuses and insider trading.
Apparently the "if we provide liquidity, you must acquit" defense does not work all that well.
Readers can watch Khuzami and Walsh live here.
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News breaks with the cycles.
The insider says the following.
"After a nice meeting on a weekend,with boobs and booze in plenty, the senior SEC official understood the ramification of increasing public anger towards the "dark shit holes" named GS and so on. He agreed to act as a ""safety valve""". A safety vavlve is used to release the excess pressure(unmanageble pressure,I wonder why are they afraid of careless Americans). A very important announcement will be made followed by lot of exchange of body fluid. At the end, nothing. SOBS. I am surprised that with almost 1/4 of the population in poverty the great nation of US of A has not shot these hookers.
The insider says the following.
"After a nice meeting on a weekend,with boobs and booze in plenty, the senior SEC official understood the ramification of increasing public anger towards the "dark shit holes" named GS and so on. He agreed to act as a ""safety valve""". A safety valve is used to release the excess pressure(unmanageble pressure,I wonder why are they afraid of careless Americans). A very important announcement will be made followed by lot of exchange of body fluid. At the end, nothing. SOBS. I am surprised that with almost 1/4 of the population in poverty the great nation of US of A has not shot these hookers.
Investigations already concluded.
Here is the official announcement:
http://www.youtube.com/watch?v=_8NOxoZ3rZc
Was that some old horror movie?
Dude on the right reminds me of Elliot Spitzer, slightly less bald.
Do they actually have the expertise on deck to even have a clue?
No, but I'm sure they'll use this as another excuse for why their $1bil budget is so puny.
A billion dollar budget is puny for what they're being asked to police. Seriously, a $billion doesn't hire you enough of the high priced legal and financial experts they'll need to address the sophisticated scams going on. And if you don't believe me, just ask are the TARP tards who think that bonuses should flow because they DESERVE it.
"A billion dollar budget is puny for what they're being asked to police. "
I agree with this part. However, $1bn is still a hell of a lot for what they're actually doing.
Good question. The way most people on this site have been compeeting in telling how stupid you must be if you work for SEC, who wants to stay if there is other options?
Haha, with grammar and spelling like that you must work for the SEC.
You prove my point. English is my second foreign language.
they'll find a "rogue computer" and shut it down........case closed.
is "rigorously" replacing "robust"? or is "robust" exclusive to the commish?
anyways, question for Messrs. Khuzami and Walsh: did you read about this first on ZH or was it the Schumer memo (he probably read it on ZH first)?
nah, SEC was misquoted. 'rigor-mortisly'
LOL
Is this the same John Walsh from America's Most Wanted ?? Now Acting Examinations Chief for the SEC ??
Perfect. Let's help him put these creeps away.
This is going to be like when the judge ordered teh fed to reveal the recievers of the emergency funds...
"Everyone move along, nothing to see here..."
They will probe HFT with the same excellence that they used for their Madoff probe.
+1 for truth
Hey you fucking morons, doesn't the fact that they are COLOCATING servers mean they are frontrunning the trades.
How FUCKING STUPID do you have to be.
Why else would they colocate servers???????? It's as if the Ruskies wanted to build their embassy next to the CIA in Langely because they "like the view"...
WAKE UP SEC AND DO YOUR FUCKING JOB.
Yeah, the colo deal is a bit obvious.
Colo doesn't let you see other peoples orders. You can't front run an order you can't see before it transacts.
What a joke. Is Ken Lewis going to tip Shaperio another $33 mil for good service this time around?
Maybe they finally got an interview with Sergey (after they had Tyler explain to them what he said), wow they just might start learning something about the real market.
Tyler getting soft. Why no "tag" for Goldman Sachs under the headline?
three months from now we see Johnny 5 and Bender being escorted to prison to serve 30 year prison sentences as the fall guys.
Bender quoted as saying "Bite my shiny metal ass"
This too shall soon be settled for under $50mill
im curious...just how much money does it take to manipulate any particular market?
when i make a $50,000 trade, it doesn't seem to make the nasdaq go up or down so apparently a measly $50,000 isn't enough to manipulate anything.
hmmmmm....maybe thats why the nasdaq started going up at 3:30. my trade. :))
Because I'm frontrunning you. Noob.
Reposted:
Ever wax nostalgic for open outcry?
So much money and resources poured into exploiting weakness in the electronic trading landscape in the name of untethered greed, yet we can't figure out how to educate 30% of our kids about subjects like basic math.
Our priorities are 180 degrees out of phase with what we need to do to survive as a society.
dude, how the hell is e. warren the chair to oversee tarp? i'm not even in the DC/tarp bank "loop" and i could tell you exactly what the fuck happened and what's happening now, just by the tape and and relevant news stories. seriously, it's a combination of obama's propaganda machine (led by rahm, the retired ballerina)/bernanke's desperate attempt to not be the fed chair during the great depression II/dim-witted congressmen/women/ banks who fucked up and need more cash/ gs' attempt to kill any competitor. Just one more thing, everyone in obama's admin. is new keynessian, enough said; take an econ class or google it.
All head fake to make believe that the authorities are serious in cleaning the market. I think that what is pushing all these headlines(the bac investigation,the cftc oil and gas manipulation,the sec church bust and so on and so forth)is the fact that the volume has dropped dramatically. Almost every blog sight I visit is talking about market manipulation,so who is buying?probably the only ones who are buying are those money managers who play with other people's money while they make millions in salaries,so of course they gonna buy. I think everybody feels the danger of the stock market becoming like the "city that lights the world". The city where GE originally was located,and which is now abandoned and in need of somebody lighting it.See you in five years after the left over of trillions of retiree money funneled back in the market,and swalloed up again by the same system.
Translaton: You SOB didn't give us bribes.
September 17th....Crossing my fingers
Apparently the "if we provide liquidity, you must acquit" defense does not work all that well.
Only if the SEC comes out in the end and says they found anything. Asking the SEC to find something wrong with what amounts to the foundation of trading liquidity, for the moment anyway (and hence their operating revenue) is like asking the SEC to actually investigate a ponzi scheme handed to it on a silver platter. Over and over and over again.
Everything I have seen from the SEC for as long as I have been looking at them only substantiates my view that the SEC is completely compromised and is beyond salvaging.
I think one of the ways to salvage it is to hire people barred from secuirities, give them cash rewards for finding impropriety, and collect those rewards from those being bad.
It's like being an Ethical Hacker for finance.
Or just poach Poly Sci majors with an axe to grind.
I like your first idea with a twist. Place the folks you suggest in charge of departments & teams at the agency and then staff them with draftees with the so called "professional" regulators operating independently. Anyone that wants a career in the industry spends 3 of their first 10 years and 3 more years once they have reached 45 years of age or later at the agency and at the agencies discretion. Reintroduce the concept of national service to Wall Street specifically and the securities industry generally. The first period of service being waved with 3 or more years of honorable active duty military service for their nation of citizenship. Make sure that a bona fide GS-1801/10 (criminal investigator) is attached to each operational team so that there is complete interoperability between the SEC, FBI & U.S. Attorney. Then base their compensation upon the impropriety discovered based not only on the total cash basis, but on a scale of severity of offense discovered and halted. Some activities may have little direct cash involvement, but have tremendous impact on the operations of markets.
"Ethical Hacker", hehe. Ya. Except use this as a training ground for those that are going to be assigned later in various areas of cyber security. Make the candidates demonstrate that they can hack the financial and associated planets and uncover actionable intelligence while pressure testing these candidates in the life so to speak..
Color me ignorant or stupid. Usually the joke is on me regardless. I cannot be help thinking that the financial system specifically & civil society generally require the reintroduction of the idea of the venerability of both cops & robbers for the whole system to work. The idea that markets are efficient without a check on the human capacity of greed & the unconstrained exercise of power has been conclusively proved false. And is in fact hazardous in the extreme to the whole of society, civil and otherwise.
I apologize for the copious use of space.
Layne, I *love* your posts!!
All you gotta do is post the same kind of pics that robo does, and I wouldn't even bother reading anyone else's.
Wow. Thanks Anon.
I gotta say that Robo's cookies & very occasional cake pics are simply sauce for the chart goose which I find the most interesting part of Robo's work. Ya. I am a 100% disabled vet so there it is. I know Andy has attempted to crack this space to some effect...
Perhaps if you can talk Marla into giving me the access with her assistance I might be willing to develop a cake & cookies addition to the ZH lineup. This might provide a needed service to the ZH readership during the now nearly inconsequential periods of the day after 10:00 and before 3:30.
It looks to me like they go "around the horn," dumping the dollar, which pumps the gold, stock markets. Then they inverse it for the return trip.
IMO, the machines (computers) at the large investment banks are in full control now. And they say "stock markets up." Stock values have completely decoupled from fundamentals at this point in time. Even stocks in companies (such as C, AIG, COF, DHI) that don't make any money, appreciate in this market. Investing in the fully manipulated casinos called the US stock markets is a 100% win, if you are long now. The markets are going up .6-.8% every day!! That is a 182% annualized appreciation in values, based on my crude calculations. My question is, how long can these propped up markets maintain this pace? Will they ever correct?
I finally capitulated today, and bought some SSO as a hedge...
"My question is, how long can these propped up markets maintain this pace? Will they ever correct?"
Actually, an easy question to answer. Please go to your favorite stockchart site and pull up a graph of the stock market since, 1920 or so. Look at it for a few minutes. You'll get your answer.
PS...here's a little hint. the situation we are in is different than the majority of recessions that we have had (inventory based). pay close attention to the graph of the period from 1929 to 1932 or so.
I sense the following SEC press release in the offing:
After an extensively thorough investigation, we are taking legal action against the firm of Biggy Smalls HFT, Inc. (aka "Smalls") of market manipulation, a violation of SEC statute Sec "blah, blah, blah".
We estimate that the total value traded in question that surrounds these violations totals no less than $1.3 million. Because several investors are likely to have been adversely impacted in obtaining fair execution by Smalls' HFT front running actions in CIT, FMN, and C-- we are seeking a penalty not to exceed $1,300.
We will continue to be vigilant in detecting and preventing such egergious forms of market abuse, except in such cases where providing an essential liquidity function takes place. In such cases, we will continue to give the liquidity provider the benefit of the doubt.
Sincerely,
Mary T. Shapiro
Grand Poo-bah Czar
Security and Exchange Commission
Washington, D.C. 20012
The SEC: We may not have much bang for the buck... but we're still bangin'!
Well this investigation shouldn't be that hard. They can start with a phone call to Assistant U.S. Attorney Joseph Facciponti. He seems rather familiar with manipulating markets in unfair ways.
reference to Madoff? Check
reference to SEC going after small fry only? Check
reference to how it's probably just a dog & pony show to placate the pitchforks & torches crowd? Check.
Hmmmm.. What can I add to this that hasn't been said already?
Guess that's about it...
found rogue computer(s) and shut em down ?
Any findings will be accompanied by $12.50 fines, a slap on the wrist and a "please dont do it again" (wink wink).
I note a modicum of cynicism in the comments on the story. It appears there is no trust in the viracity of the SEC to investigate HFT. Shouldn't we just give them a chance before judging so harshly? It isn't fair to pre-judge the outcome. Apparently, TD is giving them the benefit of the doubt, or not.
commander....you may want to get back in that hot rod lincoln and find your lost planet.
as the new sheriff in town, Schapiro has already blown her chance. sure didn't take long.
ROFLOL deadhead!! Commander, "It isn't fair to pre-judge the outcome." Since when have any of these folks been concerned about being fair. Good God man, get a hold of yourself!
For that matter, maybe the whole financial services sector is getting a bum rap here at zerohedge. Maybe we should give them the benefit of the doubt, economic cycles come and go. If we'd only "freed the markets" these CEOs could've saved the world. Hell, maybe we should give cows the benefit of the doubt, they could be hyper-intelligent unicorns in disguise, waiting to fly us to heaven...
The Sergey Aleynikov case is backfiring on Goldman Sachs and their stooges at DOJ. Next hearing in Aleynikov is Sept. 16th. Poor Sergey still has to get permission from Goldman/DOJ to travel.
Via PACER: "Ms. Shroff is Respectfully requesting a Modification on Mr. aleynikov's Bail Conditions to Allow the Deft to Travel to Carmel, New York between the dates of September 4, 2009 to September 7, 2009 to spend the Holiday Weekend with Friends and Family Members."
What a disgrace.
take the banksters the sec and congress out and hang them all
"Apparently the "if we provide liquidity, you must acquit" defense does not work all that well."
I really doubt any wrong doing will be uncovered from this investigation.
SEC is really too dumb to figure out how these Advanced Trading Systems work.
aaaaaawwwww....come on!
SEC investigating what?? they don't have a damn clue...
BTW, I know someone in the enforcement division of the SEC in San Francisco. I have been passing her articles from Zero Hedge since I discovered your website in July. While she is not high up on the totem pole, she has been passing along the information. She also told me that she attended a meeting on Goldman Sachs, which pretty much ranks them alongside Satan. She admits that the SEC needs better financial investigators or much more training to really go after these types of problems effectively. The difficulty is in attracting qualified people to the SEC in the first place, particularly in the higher management positions. So what we need is for a bunch of Zero Hedge types (competent, ethical, with a backbone, and willing to tell interfering congressional and other government bureaucrats where to go) to take over the SEC management positions and go to town, or at least provide some substantial training. If they end up giving the job to the FED, then they have let the fox into the henhouse. I did say ethical and with a backbone, after all.
Very interesting... what a different perspective... one from inside the SEC... thanks for sharing :-)
Well, it’s reassuring to hear the lion (rigorously) roar!
Perhaps the violators will be rigorously tortured, using crude medieval implements like in Braveheart; or worse yet, they might be rigorously fined, amounting to .00000001% of the ill-gotten proceeds…
Either way, the perpetrators are no doubt trembling rigorously with a deep sense of guilt, despair, and doom!
Or maybe not.
Wall Street has virtually always been able to ‘outsmart’ the regulators. Fines are simply a cost of doing ‘bidness’.
About time - if only it were true.