ARE OUR MARKETS BEING MANIPULATED BY "ROGUES" OR FIRMS?
There's New Evidence to Suggest that Crime In The Financial Markets is Rife
By Danny Schechter
Author of Plunder, and director of the forthcoming film, "The Crime of Our Time"
New York, New York: Everyone has heard of the Wikipedia but not everyone knows about the Investopedia, a Forbes website, that monitors finance for market players. One of the issues it is concerned about is market manipulation, actions by rogue and not so rogue players who, working alone or together, unduly influence the way our supposed "free" markets function.
It is a fascinating source of information for the uninitiated who hear the daily reports on the ups and downs of the Dow and believe that somehow it is all part of the natural order of the universe.
Thanks to an even more informative web site, Gamingthemarket.com, we learn that in fact markets are subject to, prone to, and characterized by all sorts of manipulative practices. Here's one you may not have heard of.
"Ghosting: An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. Ghosting is used by corrupt companies to affect stock prices so they can profit from the price movement.
This practice is illegal because market makers are required by law to act in competition with each other. It is known as "ghosting" because, like a spectral image or a ghost, this collusion among market makers is difficult to detect. In developed markets, the consequences of ghosting can be severe." -Investopedia
It looks like we have gone from the age of the trustbuster to the era of the ghost buster as fiction once again turns into "faction."
Last week, the price of oil mysteriously shot up. There were reports of yet another "rogue" trader. The New York Times later reported:
"Reacting to recent swings in oil prices, federal regulators said they were considering limits on "speculative" traders in markets for oil and other energy products." Of course, the big banks and Wall Street firms are expected to zealously oppose more oversight.
Some things don't change. Anyone remember Nicholas Leeson, a one man engine of speculation who lost over a billion dollars and brought down his own bank before going to jail? He later gloated on his website; "How could one trader bring down the banking empire that had funded the Napoleonic Wars?"
On July 4th, Bloomberg News reported:
"Sergey Aleynikov, an ex-Goldman Sachs computer programmer, was arrested July 3 after arriving at Liberty International Airport in Newark, New Jersey, U.S. officials said. Aleynikov, 39, who has dual American and Russian citizenship, is charged in a criminal complaint with stealing the trading software. At a court appearance July 4 in Manhattan, Assistant U.S. Attorney Joseph Facciponti told a federal judge that Aleynikov's alleged theft poses a risk to U.S. markets. Aleynikov transferred the code, which is worth millions of dollars, to a computer server in Germany, and others may have had access to it, Facciponti said, adding that New York-based Goldman Sachs may be harmed if the software is disseminated."