Is Goldman's Selective Trading Disclosure A Legal Way For Preferred Clients To Front Run The Market?

Tyler Durden's picture

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Anonymous's picture

Let's talk about that on a quiet, no news sunday evening....futures are already up 8 handles (they just gapped up on no news).

At this point, anyone that thinks this isn't just a select few, very large market participants jamming the market up day in and day out via futures....are living on another planet.

When US traders come in tomorrow morning and see dow futures up 100 on no news it will continue the panic buying and short covering frenzie. Why? Because futures gap up overnight almost every night on no news...and low volume...

This entire market support/manipulation/craziness is undoubtedly futures driven...usually overnight...

What ever happened with tyler's investigation of that midnight ramp up a few months ago ahead of a major fed announcement??

Anonymous's picture

Then again, the futures were way down late Thursday night and bam, the market still shot up on Friday. I'm not so sure there's a rhyme or reason to the futures market.

Anonymous's picture

Ah, but there is rhyme and reason. Reasons such as:

0.15% Fed Funds rate. Cheap money for money center banks.

Quantitative easing = pricing support for riskier assets.

Other Fed and Treasury programs designed to prevent free market price discovery (i.e., reflation programs).

So, while market activity may not seem rational in relation to what one would think is responsible management of the national budget and debt , there are reasons behind the reflation of irrational exuberance.

A rational pilot knows when to reach down and yank that yellow handle.

Tripps's picture

this guy is right though...its obvious someone is gunning them up overnite. only thing out there is asia is reacting to our friday close and stupid housing data


the negatives are huge: obama increased defecit projections to mind boggling #s

people pumping friday as a breakout. LOL

FDIC is broke



Anonymous's picture

The FDIC going broke should have been enough to sink us back below 666 all by itself.

Does anyone in the media even know the FDIC is broke? WSJ, NYT, CNN? Hello? Hello? I can't seem to find the article, kids.

Arco's picture

I mentioned this to Tyler a while back and he never responded. I agree. The fact that the FDIC is broke is a big deal. The special assessments are also starving the smaller regional banks of much needed cash right now that they should be lending out.

Anonymous's picture

Overnight SP futures typically follow Asian and European markets overnight. Nikkei is up 3% as I write this, so its not surprising to see futures up also. It's the Asian kneejerk reaction to Friday's action in US (which BTW was option expiration day for SPQ09 options) which is so annoying. Reflexivity in action, I guess.

"Option exercise results in a position in the underlying cash-settled Futures contract. Options which are in-the-money on the last day of trading are automatically exercised. QUARTERLY OPTIONS are exercised into expiring cash-settled futures, which settle to the SOQ calculated the morning of the 3rd Friday of the contract month. SERIALS are exercised into underlying cash-settled futures at their closing price on 3:15 p.m. on the 3rd Friday of the contract month."

peterr's picture
peterr (not verified) Aug 24, 2009 12:26 PM

like ..... uh, they are still -- despite their "client" status, still lambs to the slaughter........

good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions

Anonymous's picture

While this is unlikely to occur in the United States (given the acute shortage of guillotines), it might be time for the Wall Street banksters to take heed of history.

They may own the politicians. They may own the regulators. And they may simply own most of America. However, they don't own the billion or so guns currently in the possession of an increasingly angry American population.

Massive economic suffering and a billion guns is a very dangerous mix!

Anonymous's picture

Naaah, never happen, if the shit hits the fan the proles will be to busy shootin at each other to bother with the banksters. After the food runs out and the power is turned off it will be every man, woman, and child for themselves. After the pets have been eaten we'll probably be shootin our neighbors just to have some form of protien to barbeque come Friday night. With no gas for your car how to you plan on driving to NYC or D.C. to unload your clip? The way I see it, you'll see anarchy in the larger cities like the LA riots back in 92 with the rest of the population hunkering down to protect their own corner of the world.

There's a reason there's an ammunition shortage. Shortages make people want to hoard that which is scarce. Do you think you're gonna want to waste your tiny little stockpile of ammo fighting the Govt. Hell no! You'll be saving that for your personal protection. And you'll need every last bullet too!

It's a nice thought though. But the government has too many armaments that they won't be ashamed to use. Guns with no bullets are no match for nuclear, biological, and chemical weapons. Starvation and roving bands of death squads will be the norm. And how do you know that your neighbor believes the same as you do? Or the guy across town? He might see you as an enemy and shoot you down and ask questions later.

An uprising? Nah. No? Then why are people so placidly willing to live in tent cities. No my friend our only chance is in the 2010 mid-term elections. If Acorn and friends of Barack are capable of the swinging the election to the Democrats you might as well drink the Kool-Aid. Your stockpile of bullets is limited while they can import billions of rounds from their fellow political travellers in the PRC.

Anonymous's picture

Where the f**k is the SEC?

Problem Is's picture

Aren't most SEC staffers in the Hamptons on an all expense paid lovely weekend courtsey of a couple of Lloyd "Cueball" Blankfein's flunkies--- I mean visiting some friends?

Gordon_Gekko's picture

Are you f--king kidding me? SEC is part of the problem, not a solution.

Anonymous's picture

It is amazing how this institutional frontrunning is ignored by FINRA and SEC. Seems like regulators are only interested in small time cheats and clearly not the big well-connected ones.

agrotera's picture

That is because the privately held Federal Resereve Corp is said to own half the Dow, and the majority of hedge funds...and as such, they also own most politicians, create policy that suits their gain, and of course, their beloveds like Goldman and other primary dealers, are sacrosanct, too big to fail, too sacrosanct to fail, too powerful to have anyone effectively stop their machine/cartel !

Cognitive Dissonance's picture

The more things change, the more they stay the same.

Anonymous's picture

Where are the class action lawyers when you need them. This is a perfect set up, the measure of damages is the difference between the price run up, when the "tip" is given to the select group of insiders, and the price when the stock research is released to John Q moron.

John Self's picture

They're afraid that they'd have trouble establishing venue in West Virginia or Mississippi against Goldman.

e1even1's picture

according to

these are some of the people who pledge allegiance to GS. 2008 election cycle ...

Senate    Obama, Barack    $997,095 (AKA 'Change You Can Believe In')
Senate    Clinton, Hillary    $415,750
Presidential    Romney, Mitt    $234,275
Senate    McCain, John    $230,095
House    Himes, Jim    $152,798
Senate    Dodd, Chris    $112,500
Presidential    Giuliani, Rudolph W    $109,450
Presidential    Edwards, John    $68,750
Senate    Specter, Arlen    $47,600
House    Emanuel, Rahm    $37,750
Senate    Sununu, John E    $31,400
Senate    Reed, Jack    $30,100
House    Skelly, Michael Peter    $26,171
Senate    Baucus, Max    $26,000
Senate    Harkin, Tom    $24,580
Senate    Lautenberg, Frank R    $24,100
Senate    Chambliss, Saxby    $22,400
Senate    Collins, Susan M    $21,900
Senate    Warner, Mark    $21,800
Senate    Landrieu, Mary L    $20,700

Apocalypse Now's picture

Excellent, follow the money.

Notice there is no difference between Republican / Democrat.

The media is trying to position Romney as the next potential Republican candidate for the next election.

It would be nice to request a statement from each representative regarding their association with GS in light of the apparent fraudulent activities.

JohnKing's picture

Mary Landrieu sure left a lot on the table.

agrotera's picture

That is great, but could you add together ALL of the Federal Reserve member banks, and primary dealers and take a look at how this group compares to the total of all contributions for each candidate? 

I think you would find that it is the backing of the private Federal Reserve and all their affiliates and agents which buys most politicians, and as such, this cartel basically controls all policy.  That is why it is such a ridiculous red herring for all of us to hear about how important it is for the Fed to remain "independent".  The translation of that is, how important that the Fed's money and powerdominating train doesnt get disturbed.

e1even1's picture

this is what i was able to find quickly.

the financial services industry select strategic campaign contributions in the last 20 years ...

Total $2,274,622,193 Democrats $1,017,919,054 Republicans $1,243,672,592 effectively neutralizing the ballot box. there's nowhere we can go to vote this down. the US government is the REAL vampire squid brokering our life blood.

you might dream of meaningful non-cosmetic change, but that's the only place it will happen. in your dreams.

agrotera's picture

It doesn't matter which party wins if you buy both parties!


eleven1 AWESOME work!!!  TYLER, MARLA, please take note of  Eleven1's numbers--they provide an incredible picture and they say a thousand words!

The reason why no one talks about this so much is that with so many agents, and affiliates, it is hard to believe that the privately held Federal Reserve and the toobigtofail and their affiliates, are really one big cartel with mutual goals getting purchased each time there is an election.  putting the picture together the way you did eleven1, makes a crystal clear statement of truth.  Thank you so much!!! I hope your work will get turned into an ongoing conversation here at ZH!!!!!

Marshal Ney's picture

"The only thing we have to fear is..... the entire political and economic system." FDRRRRR

Ned Zeppelin's picture

The odd amounts would seem to imply some of the "donations" are property that has been valued. Or, that sometimes contributions were made in response to requests for specific amounts, e.g., to provide funds to pay a specific invoice.   Maybe GS has some complicated algorithm to determine what you get:

"Yeah, I know it's a little light, Senator Landrieu, but our HAL 9000 values your allegiance at that amount, and I just don't have permission to write a check for more. Do more and we'll see what we can do next year."

e1even1's picture

that's the way it looks to me. an incentive plan.

peterr's picture

the goal should be to make a more perfect union .

good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions

vicelord's picture

I can attest that the SEC is doing their job - I myself just got a notice from them about a week ago for making one too many round-trips in and out of a particular stock.  I was (gasp) day-trading.  I use several accounts to try and get away with this.  And 2 of them are in my wife's name.  I usually have no problem doing it.  But, evidently, they've stepped up their game a bit these days.  I was given a warning.  But God forbid I get a free-ride restriction; they're ALL OVER MY ASS with that these days.  If I get one more in the next 3 months, I'm fooked.  And, I swear to God, they are NOT fooking around when it comes to that.  Try it - buy a stock, sell it, buy another with the same money, and - if you don't hold it for 3 days - see what happens.  THIS is what they spend their days doing.  Going after you're average retail trader looking for any lapses they can find.  And, yet, all this other stuff ZH talks about on a daily basis seems to be escaping their notice.  Go figure.

Anonymous's picture

Are you trading a margin account with stock in Type 2?

Apocalypse Now's picture

With all the volatility, this can happen if you just put a stop limit on within the 3 days.

D.O.D.'s picture

Actually your transactions are being monitored by your broker, and they are reporting your account infractions to the SEC, who in turn notifies you, warns and eventually fines you.  In this case your assertion that the SEC has "...stepped up their game..." is misguided.  No doubt your broker has stepped up THEIR game, whether through fear or gain. Meaning...

A)The SEC will fine brokers who do not file trading transgressions

B)Brokers are rewarded for filling trading transgressions


To what end? You might ask.

So that fools will be inclined to believe that the SEC has "stepped up it's game". 

My cognitive dissonance's picture

Obviously, they didn't like you coming in through the front door.

Find another way in.

Gordon_Gekko's picture

The only function of SEC is to protect Goldman. Period. Even when they are after someone else, it's only because they are encroaching upon Goldman's turf (of engaging in criminal activities).

Marshal Ney's picture

"All the animals are equal, except some animals are more equal than others."

River Tam's picture

Mr. Douglas, I am beginning to see the light. Its funny that you hold yourself out as Gordon Gecko, a moniker for the "greed is good" point of view. And yet your posts take the opposite viewpoint.


Anonymous's picture

You're probably referring to Fed Reg T, which applies only to non-margin accounts or cash account with low equity.

Anonymous's picture

I have no problem with them giving a bit more to those that pay more, but they should disclose this.

Anonymous's picture

i called and then emailed the SEC in july about Morgan Stanley trying to recylce CDO trash and pass them off as AAA bonds

they got back to me 3 days ago

6 fucking weeks!!!!!

Sqworl's picture

May I suggest ZH provide a column for cc's SEC and AG complaints...It should be named

Harry Markopolous In-Box

Sqworl's picture

The problem with greed is that its blind....

Careless Whisper's picture

Another fine bit of documented research exposing the people at 85 Broad and 200 West for the perps that they really are.
There's no need asking the SEC to investigate. We all know that's a complete waste of keyboard strokes. This type of behavior needs to be looked at through the scope of RICO and possible criminal violations.
Since Mr. Spitzer is gone maybe the boys think Mr. Cuomo isn't going to play hardball.

tom a taxpayer's picture

From April 16, 2003 Frontline interview with Eliot Spitzer on the $1.4 billion stock-research settlement with 10 major Wall Street firms, including Goldman:

Frontline: "From the standpoint of the banks and the analysts, what do you think is the most serious deterrent to future misbehavior, abuse, corruption, and fraud, versus investing?"

Eliot Spizer: "The next time there will be absolutely no inhibition to bringing criminal cases."

With the WSJ disclosures on Goldman Sachs, looks like this is "the next time", right, Mr. Attorney General?

Anonymous's picture

Unfortunately, Spitzer isn't the Attorney General anymore. Frankly, I think we would see a lot more pursuit of criminality right now if he were.

Ned Zeppelin's picture

Spitzer handed over his "neutralize me" zapper gun on a silver platter, and the door on that enforcement avenue closed for good.  There have been no replacements - no prosecutor is permitted to delve into this.

monmick's picture

Unfortunately, this type of behavior is next to impossible to prosecute under the existing laws and enforcement regimes. Kind of reminds me of the investigation into CSFB's propensity in allocating hot IPO's during the 1990s -- an investigation with which Mr. Quattrone was accused of interfering. In the end, even the charges against FQ did not stick. Plus ça change...


Leo Kolivakis's picture

"The next day, research-department employees at Goldman called about 50 favored clients of the big securities firm with the same tip, including hedge-fund companies Citadel Investment Group and SAC Capital Advisors, the documents indicate."

GS, Steve Cohen and Ken Griffin...the schmooze fest continues? If you can't beat them, try joining them:

MFFAIS activity for Citadel LP

MFFAIS activity for SAC Capital Advisors

MFFAIS activity for Goldman Sachs


straightershooter's picture

Correct me if I am wrong:

So, the game is played like GS frontrun its most favored clients who frontrun the John-Q-Public via the convinction buy list  issued days later. Brilliant!! No wonder GS had an almost perfect trading records in 2Q. I shall not be surprised if GS shall report perfect trading records for q3.

John-Q-Public, it appears that you deserve being  frontrun by GS. Don't do what GS says, do what GS does.



Anonymous's picture

Right on tom a taxpayer

The settlement was to forestall any criminal charges being filed against the firms. Yet just a few short years later here comes the same behavior again. I think its indictment time ie death for any firm see Arthur Andersen.

Until some firm gets put in a body bag this behavior will continue.

Hangtime79's picture

Right on tom a taxpayer

The settlement was to forestall any criminal charges being filed against the firms. Yet just a few short years later here comes the same behavior again. I think its indictment time ie death for any firm see Arthur Andersen. You do not need to win a conviction, you just need a grand jury indictment.

Until some firm gets put in a body bag this behavior will continue.