FINRA

With Now Daily Margin Hikes In Silver, Is The SLV ETF Itself Next?

Following relentless margin hikes in silver on various exchanges, here are some thoughts on what may happen as the "regulators" do everything in their power to bring down commodity prices down as the broader population increasingly creates their own gold (and as the case may be silver) standard.

Guest Post: Are You Really Protected From Another Flash Crash?

Pop Quiz: Let’ s suppose, hypothetically, you are trading a non-Russell 1000 stock. All of the sudden, out of nowhere, the network at a major exchange is hacked by some foreign intruders. Data becomes corrupted and the high freak “liquidity providers” head for the exits as fast as they can. Stop limits are being triggered everywhere and the phantom bids that represent today’s equity market have all but vanished. Your sell order gets executed 29% away from the last trade. Exchanges are able to quickly locate the source of the network intrusion and shut down the hackers (we know, not likely, but just play along). The stock you were trading quickly recovers after it brief loss and is now back to trading at its pre-hack level. In addition to your trade that got executed 29% lower, there were over 200 other “bad trades” that were executed far from the reference price. Question for you: Does the exchange break your trade since it was “clearly erroneous”? If you answered “No”, then you are correct. How can that be, you say. Didn’t the SEC put in place all sorts of rules since the May 6th “Flash Crash” that would protect your order from this type of situation? Well, in September of 2010, the SEC approved a little known FINRA rule request (Rule 11892) which created a new category for breaking of “clearly erroneous trades”.

ilene's picture

Self-dealing, conflicts of interest, favoritism and arguably fraudulent conduct are not unique to the treatment of auction rate securities during the economic collapse of 2008, for these qualities can be found in everything the Fed touches. But ARSs are one blatant example hardly anyone talks about.

Here Comes Abacus V 2011: Former Head Of JPM's Structured Products Desk To Be Charged With Securities Fraud For CDO Transactions

Considering it was the charges of securities fraud levelled at Goldman last year (subsequently settled) in late April that were the primary catalyst for the start in the market sell off, it would not be surprising that in a year which so far is following the script of 2010 verbatim, that we should get another allegation of insider trading by a major bank in something relating to CDO fraud, just to seal the guarantee on QE3. Well, guess what. We just did. As Bloomberg's Joshua Gallu and Jody Shenn noticed first, in the FINRA Brokercheck record of one Michael Llodra, there is a curious announcement. To wit: "MR. LLODRA RECEIVED A WELLS CALL FROM THE STAFF OF THE US SECURITIES AND EXCHANGE COMMISSION INFORMING HIM THAT THEY ARE CONSIDERING RECOMMENDING THE COMMISSION COMMENCE AN ACTION CHARGING HIM WITH VIOLATING CERTAIN PROVISIONS OF THE FEDERAL SECURITIES LAWS BASED ON HIS INVOLVEMENT IN THE SALE OF A STRUCTURED PRODUCT IN 2007." And just who is Mr. Michael Llodra? Oh only the global head of structured-product collateralized debt obligations at a little firm known as JPMorgan. And while JPMorgan has not been named yet, this news coming out a day ahead of JPM earnings is bad to quite bad. Recall that the Abacus process against Goldman started with the filing of Wells notices against Fab Tourre and his supervisor (which were never disclosed in time - a fact observed then by Zero Hedge - and subsequently ended up costing GS a little pocket change in FINRA appeasement fees). Does this mean the SEC is about to launch an all out assault against JPM at some point in the indeterminate future? Well, for an agency which is in dire need of improving its image, this just may be the case. Not to mention that the double beneficiary of this action would be none other than Goldman Sachs: a market sell off here would guarantee QE3 and certainly weaken the firm's primary competitor. Two birds with one porn-addicted regulator.

Advice On How To Trade Gross' Treasury Dump From A Former PIMCO Employee

Having worked at PIMCO for 4.5 years, I can tell you that this kind of a major allocation decision was not reached overnight nor was it reached without considerable debate by every senior member of the firm. In other words, the decision to lower total US Treasuries to 0% was discussed by senior portfolio managers, senior account managers and many prominent outside consultants for days and perhaps even weeks before it was finally implemented. They never do anything over there without vigorous debate and discussion. For example, Alan Greenspan is a paid consultant to the firm and often participates in their quarterly Secular Outlook meetings. I don’t know if Mr. Greenspan participated in the debate about this decision but I wouldn’t be surprised if he or others of his stature did. By this move PIMCO is clearly indicating, almost by putting their reputation on the line because imagine the underperformance they face if they are wrong, that bond yields in the US will be rising soon, US Treasury prices falling and liquidity drying up to some degree.

Themis Trading On The SEC's Flash Crash (Non) Report

The report is out. Click here to read the 14 page report. The Joint CFTC/SEC committee makes 14 recommendations which they intend to focus on to ensure the integrity of our connected market place. We would like to highlight the 3 recommendations that we think are “news” today, and that we have particularly expressed concern about over recent years: Recommendations 10, 11, and 12, which deal with order cancellation fees, internalization, and trade-at rules. Missing in the report, however, is any discussion of proprietary exchange data feeds, the proliferation of exchanges, or minimum order life. Also, this report is a stark contrast to the September 30th report, which focused more extensively on an algorithm trading eMini futures from a large money manager. The HFT community, at that time, focused on that aspect of the report extensively. This report is an improvement, as it does begin to examine structural inefficiencies and risks in our current market structure.

Fator Securities Market Commentary: Go All In On Bernanke's Weak QE3 Hand

There are two reasons why I think the Fed will be loathe to remove QE. The first is the huge benefit (from the government’s perspective) of creating an inflation problem for China which will eventually force the Chinese to strengthen the Yuan. Congress has been pressing for harsher measures to force the Chinese to strengthen the Yuan (link here) for years and QE2 is turning out to be exactly the kind of pressure that just might work. I’ve long argued that this is a case of be careful what you wish for because the second the Chinese allow the Yuan to strengthen materially, the prices for everything that we buy from China (which is basically every single item on Walmart’s shelves) will rise an attendant amount. The other reason why QE is going to be with us for a long time is the ongoing need to support the massive size of monthly Treasury issuance. With the US expected to run a $1tr - $1.5tr deficit this year and another $2.5tr in maturing bonds to roll, there is very little chance that the US could continue to issue bonds at the current low rates without huge support from Mr. Bernanke’s POMO operations. Our total new borrowing and refunding needs will be greater than $300bn per month which is simply astronomical. Even bond investing legend Bill Gross is calling the US Treasury a ponzi scheme. If Bill Gross isn’t buying Treasuries who is?

And, With A $2.00 Price Target, The Latest (Alleged) Chinese Fraud Is....

"Based on our research, China Agritech, Inc. (listed on NASDAQ as CAGC) is not a currently functioning business that is manufacturing products. Instead it is, in our view, simply a vehicle for transferring shareholder wealth from outside investors into the pockets of the founders and inside management. Our price target of $2 is based on the cash currently reported on CAGC’s books—$45.8 million—divided by the number of shares outstanding. The company’s remaining business does not, we believe, exceed $7.5 million in revenue per year. If the overhead associated with maintaining a listed company is taken into account, there is no profit. Since we believe China Agritech has no valuable technology, intellectual property, customer relationships, or capital assets, there is no value to the company other than dissolution value." LM Research

Chris Whalen On The Zombie IPO: Is American International Group the "Blood Doll" of Wall Street?

In this issue of The Institutional Risk Analyst, we return to the zombie dance party to check in on the queen of the prom, American International Group ("AIG"). First a question: Vampires are all the rage now in popular culture, so allow us to offer a macabre metaphor for AIG. Do you know what a "blood doll" is? A girl who craves to be the regular victim of or willing donor to a vampire. But hold that thought.

Vincent McCrudden, CEO Of Alnbri Management, Arrested For Threatening To Kill Members Of SEC, FINRA And CFTC

Yet another person appears to have flipped out, and attracted the government's attention, this time luckily without any actual casualties. Curiously the target of the latest FBI arrest is not some insane gun toting troglodyte, but a 20 year Wall Street veteran: Vincent McCrudden of Alnbri Management. Presumably the reason for the arrest is that the commodities trader had threatened to kill 47 members of the SEC, CFTC and Finra in a post on his website. The following information has been pulled from his website. While McCrudden's fund appears to have been modest if at all notable, it would be curious to discover just what recent perceived action on behalf of the government may have forced the manager to take the step. The kicker: an email from McCruden to CFTC attorney T.M. sent on December 16, 2010: "You corrupt mother fucker! You're not getting away with this....Merry Christmas!"... Much more in the charge against McCruden presented inside.

ilene's picture

FINRA, Fess Up

FINRA oversees the broker dealers, and 70% are calling for increased transparency. FINRA blew them off. Those 70% represent America more than the large banks located on Wall Street. What truly amazes me is how little attention is being paid to this outfit.

ilene's picture

As its memory of the unhappy market collapse of 1929 becomes blurred, it may lend at least one ear to the voices of The Street subtly pleading for a return ” to the good old times.” Forgotten, perhaps, by some are the shattering revelations of the Senate Committee’s investigations, forgotten the practices and ethics that The Street followed and defended when its own sway was undisputed in the good old days.