Is History Being Repeated?
Sirius XM forums have been buzzing all weekend over a screenshot that has been posted to the Internet and uploaded to sites such as YouTube. Investors in Sirius XM have assembled together and have filed complaints en masse with nearly every news agency, market maker and regulatory body such as the Securities and Exchange Commission.
The video itself certainly raises questions, yet offers very little in the way of real answers. I have found what I would consider to be one plausible explanation. Investors look at the screen shot in question and automatically lay blame on the market maker itself. Yet an SEC enforcement action against Goldman Sachs in 2007 may offer an alternative explanation, which only the SEC can prove or disprove at this point. It is my sincere hope that they will look into the matter.
In March 2007, the SEC reported the following:
“The SEC Order and the NYSE’s Decision allege that Goldman’s customers carried out the illegal short-selling scheme by placing their orders to sell through the firm’s REDI System© – Goldman’s direct market access, automated trading system – and falsely marking the orders “long.” Relying solely on the way its customers marked their orders, Goldman executed the transactions as long sales. In addition, because the customers had sold the securities short and did not have the securities at settlement date, Goldman delivered borrowed and proprietary securities to the brokers for the purchasers to settle the customers’ purported “long” sales… “
I am by no means implicating Goldman Sachs in this case. The history and reliability of electronic trading systems are called into question here. The only mistake the Goldman Sachs client made was that they executed all of their trades through Goldman. Criminals like everyone else learn from their mistakes. We have witnessed in recent weeks similar questionable trades that have moved from market maker to market maker.
Reviewing the 2007 release again we learn:
Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement, said, “Customers now have direct market access platforms such as REDI© and other automated
trading systems, which enable brokers to execute larger volumes of trades more quickly and efficiently for their customers. However, as this case makes clear, direct access does not obviate a broker’s own responsibilities under the Commission’s short sale rules, and it certainly does not allow a broker to ignore apparent discrepancies indicating illegal trading by its customers.”
Each week brings with it a new automated trading system that is called into question. Just one week ago, some were questioning NITE trading rather than ISEG. I would argue that the villain in this scenario is not a market maker at all but rather an individual or group of high powered investors or hedge funds that are using electronic trading systems to manipulate individual stocks; jumping from stock to stock and trading platform to trading platform. Like terrorists, they are striking quickly and moving often. SEC? Are you listening?
Position Long Sirius XM
What is pissing me off is we have down the ground work for the SEC and, so far, they have not done a fucking thing to stop the manipulation. My goal is to see that who ever is manipulating the stock is criminally convicted and all monies returned to the investor.
Not Gonna Happen, Methinks the system is rotten, and we’ve been, and continue to be, HAD!!!
It’s a shame, but honestly, 7-years ago as I poured in my hard-earned dollars into the US-equities exchange system, a colleague of mine, who is not from this country originally, warned me that the stock-market, in his humble opinion, was corrupt and run by a bunch of crooks…….I today thoroughly regret not heeding his advice………I think the gamut has been run and I am chilled to my core to think that he was ultimately right.
I now Fear that the next great big crash, and quite possibly the demise of the financial system as we know it, will be as the greatest scam in history, begins to unravel and we realize that the likes of Bernie Madoff, are just the tip of the iceberg, and he turns out to be just another ‘little fall guy’ for the really big, behind the scene, crooks.
God Help Us……………..
will never happen
what is that, exactly, Steve ?
The Melt Down…………..or ‘God’s’ Help ?
That’s the USA way
Thanks for publishing this Brandon – the boards have been hotly debating this over the weekend. I know I and several others have been doing what we felt necessary to report the manipulation – but sometimes us little guys don’t get the impression the SEC is listening at all. Even if they are… many of us aren’t convinced they are capable of doing what they are mandated to do. Either way – it has to start somewhere. Again thanks for publishing this article.
I thought selling to yourself was illegal?
How did overstock.com settle there problem? It was the same thing.
Tom…
I don’t think the problem is settled. I belive that Overstock.com has sued, I have not kept up with the current standing on Overstock.com, but that company was almost ruined.
Until the goverment takes over the SEC and puts the enforcement under the Dept of Justice nothing will happen. For years alot of people on this board have complained to the SEC regarding Sirius at one time or another with no results.
I think this is the first time so many people have put forth so much effort. Will it pay off? I don’t think so because it would take a lot on investigating hours to follow all the trades and platforms to trace back where the trades start from and then to monitor them.I don’t think the SEC has the man power to do it.
I do know if the Dept of Justice was doing the enforcement of the regulations this bullshit would stop.
The last people you want after you is the very sharp attorneys from the DOJ that can call on the FBI for additional help when needed.
imho
vaporgold
Brandon….almost forgot
Thanks for the story on this subject!!!
vaporgold
Do you mean implicating GS, not implementing?
Either way, thanks for the attention to this. Lets hope something gets done.
Draland…
I tend to believe the corruption you are referring to and THEY ARE destroying the financial system of the WORLD by GREED.
Sad to say ‘we’ may be right, but Your Name inspires me nonetheless, to believe……… there may be “Hope” !!
😉
I just wish the crooks that control the stock market – with a complete stranglehold as we have found out – would be investigated by the crooks from the SEC. Nothing much would come of it; I just love any contest where the opponents are equally matched. It makes for a great competition!
the SEC are the crooks
Who are “THEY” ???
The crooks in wall strett, in SEC, in the white house and MADOFF look alike crooks?
We have a smart Treasury secartry to find them out and protect them … OOOOPS!
Is he smart because:
1. He did not pay his IRS taxes? or
2. Is he smart because he did not know how use TurboTax as he tetified in front of Ali Baba committee in the congress, BUT we assume that he knows hoe to use and understand where the bailout money is going?
This will not change until we realize and change the fact that the financial instruments of a corporation, their stocks and bonds, are not generally being used for the lofty stated reasons of raising capital for the company. Several years ago a company named World Airways was under attack from shorts and a few organized bondholders led by a guy named Seymore something or other. Seymore had attacked Storage Technologies previously and would constantly go on message boards and conference calls and accuse the management of stealing,nepotism etc. Along with shorting the stock the effect on the price of the stock took hold. Seymore could then buy lots more bonds at huge discounts and cover his short positions. All making himself lots of money all on statements that were never true. He would even resort to filing pro se lawsuits in the Chancery Court in Delaware that if you read the lawsuit it sounded like a rant from a child. Although I complained to the SEC nothing was done about somebody going around and knowingly and purposely making false statements about a corporation and decreasing the assets of the other investors. I believe he is now dead as he was elderly at the time. His market manipulation ways of doing business did not, sadly enough, follow him.