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Senator Kaufman Blasts SEC And Getco For Latest Episode Of Glaring Regulatory Capture
Senator Ted Kaufman's statement on Getco hire of SEC staffer with knowledge of "Flash Crash" and High Frequency Trading Review - please read this in conjunction with "$34 Billion Asset Manager Says Market Prices Are Manipulated, Accuses NYSE Of Intellectual Property Theft, Debunks HFT "Liquidity Provider" Lies"
WASHINGTON, DC – Senator Ted Kaufman (D-DE) issued the following statement after learning that electronic trading firm Getco LLC has hired Elizabeth King – an associate director of the Securities and Exchange Commission’s (SEC) division of trading and markets during the Commission’s ongoing review of market structure and high frequency trading issues — as a member of its regulatory affairs team.
Kaufman said: “This is another example of regulatory capture at its worst. It is one thing for Wall Street firms to hire SEC staff for their general knowledge and expertise. It is quite another, however, when the leading high frequency trading firm, Getco, reaches into the SEC’s Division of Trading and Markets and hires a senior official who presumably has been close to, or perhaps substantially involved in, a major ongoing Commission review of a broad range of market structure and high frequency trading issues in the equity markets -- a review that should lead to additional rulemakings that will have a direct bearing on Getco’s trading strategies.
“Indeed, Getco is hiring Ms. King shortly after the May 6 ‘flash crash’ and the extraordinary efforts by the SEC – presumably with Ms. King’s involvement – to understand how high frequency trading may have contributed to unusual trading activity in the equity markets on that day. According to the SEC/CFTC preliminary report, ‘staff also intends to pursue a joint study to examine the linkages between correlated assets in the equities (single stocks, mutual funds and ETFs), options and futures markets. The study could partly focus on examining cross-market linkages by analyzing trading in stock index products such as equity index futures, ETFs, equity index options, and equity index OTC derivatives using, to the extent practicable, market data, special call information, and order book data.’ These include areas for which Ms. King had official responsibility at the SEC.
“As for representing Getco before the Commission, Ms. King is subject to a one-year ‘cooling off’ period. Regardless, Ms. King, from the day she is hired, will be able to inform Getco of her knowledge of the current views of every Commissioner and fellow staffers with whom she worked as to the meaning of the May 6 flash crash and the possible direction of future studies and rulemakings involving high frequency trading, thereby richly informing Getco’s future regulatory and business strategies.
“In addition to a ‘cooling off’ period before senior officials can appear before the Commission, Congress or the SEC should consider banning senior officials from taking jobs from those companies affected by rulemakings on which the senior official was substantially involved during the one year prior to their departure.”
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Just like Al Capone. Buying up the cops. Once they start catching on , Al just put them on his payroll.
This is biz as usual......Big Pharma, Big Oil and all the other Mr. Bigs have been buying up their potential gubmint adversaries on the cheap for many years. Sigh.
If they didn't buy up gubmint adversaries, they'd be history. They owe it to their shareholders and their jobs to survive. It is a testament to the will to survive, not biz as usual.
Until Americans demand that the Al Capones of this world be put to justice, then the cops and the rest of the gubmint toadies will always be on the take.
Yawn. GETCO made her a better offer. Why should she not take it?
Yeah JohnG, why don't you sell your mother for the highest price? Money talks, no?
JohnG's old man already sold his mother.. where do you think JohnG came from?
I just listed Granny.... Any offers....?
I'll take her if she's got a heartbeat... Squeeze out a little JohnGJr.
I think maybe we're all just kidding ourselves. Sure, I believe in justice. I want the market to behave as it should, but who's to say it ever will? I fucking hate it when the old saws become true: don't bet against the Fed. That's exactly what I've been doing, and taking it hard because of it. I believe in my analysis and my convictions about how this market is fucked and wants to go down and eventually will... but I don't have the levers. I think they keep turning the crank until everyone begins to believe it again and we all just look like a bunch of bedraggled lunatics crying out that the end is near. Maybe we're right here, near is in geological terms,
I'm pissed.
There is no justice.
2pac - They Don't Give A Fuck About Us:http://www.youtube.com/watch?v=ecCQ9w0qV8k
or if you prefer.
Michael Jackson - They Don't Care About Us:http://www.youtube.com/watch?v=QNJL6nfu__Q
I guess it just depends on how you want to end up. I just was discussing this with my husband. He agrees that we should be out of the market, but he still holds on to the dream we've been brought up with, that if you put aside a little each month to invest you'll accumulate riches for retirement.
More and more, I'm of the opinion that it will be much more beneficial to put aside cash and gold/silver, continue to live debt-free, and prepare for a very simple retirement. We're not rich. No amount of stock purchases are going to take us to the life portrayed in the media as the "norm" for the retired middle-class.
And I'm fine with that. I'll take a bit of land, a snug little house, a nice garden and mini-orchard, and enough cash to spoil my grandchildren a bit.
I just hope that's attainable once everything collapses.
Terribly off topic, but you remind me of my grandmother. She was 29 when the Depression came down. When my father and I had to put her in assisted living she cussed a blue streak that we were just trying to steal her money. Long story short, when we moved her stuff we found $ 13,000 cash under her mattress. I'll never forget it. The old man stuffed it in a strongbox untouched until he died, petrified to touch it due to of fear of Grandma's wrath from the grave.
What was weird is Grandma was sitting on 7 figures in properties she never considered to be money. Even when she was sane she griped about not having any money. I'll never forget that.
Cash , perception and property can often be an illusion.
The flip side of that is that she, presumably, lived modestly as measured by the standard of her means. Does anyone live modestly in the U.S. any more? If a couple can afford a $500K house in which they could set a lot of money aside, they just *have* to have a $750K house. They just *have* to show their greater status. Why? It's so stupid, so insecure.
There's a happy medium somewhere between what your mother was doing and the typical in debt up to their eyeballs couple. It just seems to be practiced by very few.
This is one of the inherent problems of the world. Everybody living beyond their means from the governments of the world right down to the common citizen. Easy credit is a destroyer of wealth.
It will be very interesting to see if people my age turn out the same as people who were your grandmother's age during the Depression. I'm 31 and have gone from being terribly irresponsible with money and time in my late teens to doing everything I possibly can to manage our household and finances responsibly.
I just wonder if many people have it in them to be happy with simple things anymore.
Contemplating how bad things might get can make you miserable or it can make you really grateful for how good your life is right now. I open my kitchen cabinet and see a box of pasta. I didn't have to grow the wheat to make that pasta. I didn't have to mill the grain into flour. I didn't have to knead and cut and dry the dough. I just worked for a few minutes sitting in a comfortable office environment to make the buck that bought that box of pasta. Will it always be that way? I really don't know, but I must say it's wonderful right now.
I'm betting that it will change at some point, which is why I'm learning all I can about old-fashioned skills. I'm just taking it one step at a time. I've actually got a loaf of bread going right now made out of freshly ground wheat. Granted, I used a motor attachment on the grain mill to grind it and it's being pampered in a bread machine, but I'll slowly work my way to hand grinding, hand kneading, and popping the dough in to the solar oven in the backyard.
Goodness. I would never have even imagined this five or six years ago.
+1 Michelle. "The dream we've been brought up with" had such a lovely ring to it: we'd all tuck away a little bit in the stock market each month, and over time we'd build up a nest egg for our comfortable old age. It has always been considered practically un-American not to buy into this balderdash, but a moment's reflection shows just how fraudulent the whole scam really is. Yes, some people will come out ahead on their financial investments, but the market is a zero-sum game, so for every dollar won, there's a dollar lost, too. It is mathematically impossible for everyone to retire comfortably via stock market investing, no matter how prudent they think they're being. When you add in the constant bleed of brokerage fees, commissions, taxes, inflation, etc. you see that the only real long-term winner here is the dishonest casino itself.
As a grandpa, I urge you to make sure that the cash you set aside for your grandchildren is element 79, not FRNs. They will marvel at your foresight.
"Element 79." I like that. That's definitely the direction we've taken. Sometimes, my husband can't believe his good fortune; his two hobbies that I used to take the most issue with are now at the top of my list: firearms and numismatics.
I figure both are good things to hand down the family tree.
"No amount of stock purchases is going to take us to the life portrayed in the media as the "norm" for retired middle class."
AMEN SISTER.
"I'll take a bit of land, a snug little house, a nice garden and mini-orchard, and enough cash to spoil my grandchildren a bit. I just hope that's attainable once everything collapses."
It may be attainable, sister. Just keep your eyes on Zero Hedge. Short stocks until they make it illegal. When that happens, you will have confirmation that it is all going kaput. Short U.S. treasuries or corporate bonds if we go into hyperinflation...until it is condemned as illegal. This is another form of confirmation that it is all going kaput. It will be the hyperinflation, not the illegal shorting that is the sign.
Not sure that debt free is the way to go if we go into inflation mode. It will easy to get out of debt with those inflated dollars. I don't think it will matter though, at this point. I think guns and amunition will be more valuable than gold/silver.
I am an idiot so, please, don't listen to me.
Our only debt is our home and we've stopped putting extra towards our mortgage because I also think hyperinflation is on the way. I'd rather put those extra dollars to work now on our tangibles and save the payoff for when greenbacks are best used as fire starters!
How did J.R.R. Tolken know how this would all play out?
He read the Book of Revelation, douchenozzle. Tolkein and Lewis (C.S.) were pals.
Shocked. Shocked, I say!
And nary an effort to change the laws regarding the rites of passage from regulator to regulated.
Why Hypocracy is Cheap;
Requires No Action Subsequent to Exhortation.
Wow, exactly like the Fox employing the top investigator into organised chicken killing.
Like a rapist employing the top witness for the prosecution.
In some places it is illegal for a state employee to go work outside in the area of their expertise for some years. Likewise for politicians in some countries. I think some Australian states have these rules.
Sources of this information?
Non-compete "agreements" are generally unenforceable.
If he keeps this stuff up he won't be able to finance his next campaign or find a cushy job when his term is over. He's welcome at my house though.
to michelle:
yes, ma'am.
Kaufman is awesome.
Imagine if more politicians were like him, instead of p.o.s. corrupt sell outs.
What a land we would have.
What is more telling is that 99 senators and 435 reps. have not made any statements about this.
The banks are now legally allowed to keep two sets of books. One for their internal decision making and one "mark-to-fantasy" for everyone else..... including the IRS & SEC.
In the old days, that would have been the MO of organized crime. Now the banks do it with the government's blessings.
So, if the trading houses are now buying off govt agents....legally....what's the big F-ing whoo-de-doo?
It's a plutocracy pure & simple. Get used to it.
Two sets of books, 1 for figuring bonuses and the other used for getting bailouts (& not paying taxes).
Color me reassured.
Crony's like to surround themselves with either like minded fellows or those they can pin something on. Happens at all levels. My experience in corporate is the same. They'll never hire or promote an honest agitator in fear of being exposed by them.
Those jobs are for retiring Senators, goddamit!!!
She got Dodds job.
For a little extra nausea, read the WSJs take on this event. King is joining Getcos "regulatory team" because she is a "trading expert". Getco of course just happens to "provide liquidity" and "reduce spreads".
The article kinda sorta vaguely implies good ol Getco is just wanting to make sure it is toeing the regulatory line in its never ending quest to help the markets with its genorosity.
Not even the faintest mention of anything remotely fishy given the context of recent events. The flash crash is only referenced as an aside, one of those anomalies that occur that no one can see coming and isnt a big deal apparently.
Hard hitting journalism at its not so finest.
At least they reported the event, spun to mind numbing levels, but still more than CNBCs "Breast enhanced news" approach.
The USA is simply a fascist govt; modernized for the masses. Sure you can vote for your leaders, but they will be supplied by the likes of Citigroup and Exxon. Take away a few hot button issues and the two parties agree on a whole bunch of stuff that their corporate sponsors pay them to.
Sure you have freedom of speech and assembly and all that good stuff, but that dosent impair the fascists one iota as they control your lives and take your money. Govt of the money by the money and for the money.If the WSJ is any indication of "freedom of the press", it must mean this freedom has been usurped by the fascists.
A single congressman ranting dosent stop getco from hiring the SEC staffer and potentially impairing an ongoing investigation. Come Monday Getco will happily be frontrunning millions of trades and only providing liquidity on melt-ups, and stealing shares with crashes the hft programs cause in the first place. If they know all trades will be junked at 60 percent or whatever, the algos can simply steal at 59.9999 percent a thousand times a second.
Beware of Dems and Repubs getting all populist all of a sudden.
Fire the whole goddamn bunch, I would vote for any third party at this point. Even avowed Fascists for at least acknowleging their true colors. I hate Fascism but damn, what do we have now? Fascists in donkey and elephant clothing.
(rant off)
(rant on)
Nothing will change until the money is removed from the electoral equation. All federal elections should be publicly funded (qualification based on level of documented support regardless of party affiliation), and professional lobbying must be eliminated. Finally, the election cycle is as obscene as the rest of the system... "throwing the bums out" takes less than two months in the UK... it's 2 to 3 years in the US.
All else would be addressed over time.
+10
This shit has got to STOP and STOP NOW! Go get em Ted!
Here it is....
This points towards the obvious....that is not obvious...
ie...The revolving door movement from the SEC to the corporate side is not going to stop ...until it does....
This requires new legislation that points towards two employment venues...
One cannot crossover from the SEC employment "govt" to the corporate side without a long term waiting period...ie 5 years....in other words the rolodexes
will have to be given time to lose their value....
Also govt. cannot be so intrusive either...
THIS too is solvable...
All that needs to happen is the formation of a true direct access electronic marketplace that is universally available to all private side account sizes....This means complete defragmentation of the exchanges....This means no dark pools or any type of matching outside of the exchange....
The exchange has become software that can be easily transported to any domicle in the world. One could care less where the exchange is as long as they are getting access to it....
But I can tell you this...
The SEC/Corporate employment revolving door is the exact reason that GS can have huge time periods where they have no daily losses in trading.....furthermore made possible by US Govt. policies...
Quite frankly ...there is no current interest in having a truly viable and "non played" direct access defragmented exchange....because it would require that the current corrupted system loses out on big $dough....
Make no mistake....The US exchanges are "owned" and are the product of FASCISM.....
<msacras>Elizabeth King is obviously a woman of great integrity and high personal morals, who provides a shining example to women in business and our young people in general.</msacras>
DavidC
I would suggest that the SEC send letters to GETCO stating that this new employee is forbidden from working on any SEC HFT investigations and recuse herself..Let her monitor Porm all day!!
I think they are actually buying her knowledge of the investigation and her ability to influence the current SEC employees.
The HFT resolve is three words....
ONE SECOND MINIMUM
Problem solved....
Revolving door is working for the corporations and banks, it has been for a long time.
Actually, I would have a .5 - 1.5 second randomizer in .1 increments in place.
Nice try. Can't work. You can't stop an individual from using all of his/her contacts and skills to benefit him/her-self after government employment. Better to prohibit lobbying, me thinkest. Or, am I just so naive that i should be panned from commenting on the internet forever?
Banning the lobbyist function is an excellent....and much needed task...
Why ? Because the average public cannot lobby because of money, time, and legal largesse constraints....
But on the other hand...there are functions or personal restrictions that a human should not be allowed to do...ie game the system....which is exactly what the revolving govt/corp.door does...
It's like freedom of speech...one can only take it but just so far...
................................................
And nothing meaningful is going to happen in the US without a complete and game changing tax reform that will place production of goods and services the number one "comeback fast" endeavor....
no different than former DAs working in private law firms, or former FBI personnel working in corporate security.
Flyer:
I think the SEC IS worse cuz it is directly connected to the churning of a $14trillion economy
Flyer, I see your point, but this is more like a FBI agent going to work for a drug cartel. (not as an undercover!).
Seriously though, lets say a major firm was under a FBI investigation for say racketeering or some major Federal crime.
The lead investigator suddenly cleans out their desk, puts in his or her notice, and quits to persue civillian employment. Of all the jobs out there for former agents our exFBI member lands one at the very firm where weeks earlier the FBI was preparing to send charges against the executives to the US attorney.
Gee, why would the company be so keen on having the guy who was trying to slap cuffs on them now working for them? Why would a dedicated law and order man want to work for such a sleazy company?
I concede it may be technically legal, but in this climate of great distrust of wall street and the SEC (wasnt someone in the sec Bernies relative or something?) and this "hope and change" "transparency" touting President, having the raccoons (no offense to rocky) hire one of the watchdogs is just a tad fishy.
The "natural hiring of the best and brightest, nothing to see here" argument for the revolving door as touted by CNBC and lobbyists, falls flat when considering the SECs track record lately. Missing the Ponzi of all time when compelling evidence is presented to you, and such, means the best and brightest arent quite so bright. Connected to the "right" people, maybe, but generally being the best and brightest would require some sort of accomplishment at their last job you would think.
Common sense and 5 minutes of critical thought would tell any reasonable person that the revolving door is very unethical at best, blatantly corrupt at worse.
Obama is talking "hope and change", but the revolving door keeps spinning faster and faster.
No offense taken! I do have some sleazy cousins.
Buying support continues ...
DOW updated charts:
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1