Is this Illegal?

[Hydroblunt]

Quote from gunslinger:

Window dressing has nothing to do with manipulating a stock up or down. Mutual funds are just kicking out there dogs and buying better performing stocks at the end of the quarter just so it looks better to the client.

You need to brush up on your knowledge how the markets work.

Window dressing is when mutual funds start buying stocks that they have large positions in for the sole purpose of giving it a higher closing price at the end of the month, hence reporting good returns. The trick is that it is done on lower volume and the shares bought is relatively insignificant to the full positions. No possible way that fund could liquidate its positions at the inflated price hence the name "Window Dressing".

Similiar to what I-Banks do when they get large allotments of IPOs. After the first few days as the volume dies down, they start running up the price on low volume, then release their upgrades and dump their positions onto the funds (mom & pop moneys). Gotta love it.

 

[let it run]

Quote from newguy1:

Say you had a group of traders, or just 1 trader in a room that had a lot of buying power...

Now say I'm long a position. Then I ask everyone/or someone with massive bp to long the stock to increase the price. I don't think this is illegal.


Now say you're a small group of traders. You're all long a position. Then you communicate with your buddy that runs a hedge fund and ask him to go long...big.

Is this illegal?

Surely, this is what the likes of Paul Rotter (large scale "Flippers")do day in day out with his small team of minions.....

 

[gunslinger]

Quote from Hydroblunt:

You need to brush up on your knowledge how the markets work.

Window dressing is when mutual funds start buying stocks that they have large positions in for the sole purpose of giving it a higher closing price at the end of the month, hence reporting good returns. The trick is that it is done on lower volume and the shares bought is relatively insignificant to the full positions. No possible way that fund could liquidate its positions at the inflated price hence the name "Window Dressing".

Similiar to what I-Banks do when they get large allotments of IPOs. After the first few days as the volume dies down, they start running up the price on low volume, then release their upgrades and dump their positions onto the funds (mom & pop moneys). Gotta love it.

With all do respect, you have no idea of what window dressing is.

Comparing it with what you believe underwriters do, doesnt make any sense. Your point of them pumping and dumping is/was isolated for the most part to small bucket shops of the 90's. Do you really believe that a seasoned fund manager would buy into an ipo after the underwriter has inflated the price and was dumping their inventory? Besides no firm can put a recommendation on a stock till after the quiet period.

I dont know why u believe that "window dressing" is what you defined. Not to be condecending, but look up for your own edification what it is.

 

[MorganSys]

Quote from Hydroblunt:

You need to brush up on your knowledge how the markets work.

Window dressing is when mutual funds start buying stocks that they have large positions in for the sole purpose of giving it a higher closing price at the end of the month, hence reporting good returns. The trick is that it is done on lower volume and the shares bought is relatively insignificant to the full positions. No possible way that fund could liquidate its positions at the inflated price hence the name "Window Dressing".

Similiar to what I-Banks do when they get large allotments of IPOs. After the first few days as the volume dies down, they start running up the price on low volume, then release their upgrades and dump their positions onto the funds (mom & pop moneys). Gotta love it.

Window dressing is just buying stocks that went up and selling the ones that went down; it's not about price manipulation. However, it is probable that some mutual funds do what you describe (which is illegal).

 

[rufus_4000]

Outside of the 5% concentration rule, where a single entity, if hold > 5% of all outstanding securities, need to file the proper disclosure with SEC, I am not aware of any strict rules on securities holdings.

Case in point, WSJ reported last week (or weeks ago) that Citadel currently holds > 50% (!!) of all standing 10-year notes, making the 10 year notes virtually impossible to borrow / lend, and the futures vs cash spread through the roof, and the overnight repo rate to reach astronomical levels (ppl on the repo desks said around 30% annual interest rate for overnight repos). But nevertheless, this is *NOT* illegal.

Citadel would make around 10M *risk free* by just selling the corresponding Sept future contracts, and making the deliveries, not to mention the repo profits. In fact, heavy rumor is that the Fed meeting in NY is to partly deal with this specific topic, since failed to deliver on 10-year note futures and swaps will be disasterous to the whole credit markets. But again, even at this magnitude (and I can't imagine anything bigger than disrupting the 10-year government note market), this is deemed not illegal.

http://pqasb.pqarchiver.com/wsj/acc...Role+Dents+Market+Theory+On+Treasury+Shortage

Personally, I have known trading firms and hedge funds that traded 2-3% of all outstanding shares for a certain security in a single day, and their compliance officer didn't even blink.

Rufus

Quote from newguy1:

Say you had a group of traders, or just 1 trader in a room that had a lot of buying power...

Now say I'm long a position. Then I ask everyone/or someone with massive bp to long the stock to increase the price. I don't think this is illegal.


Now say you're a small group of traders. You're all long a position. Then you communicate with your buddy that runs a hedge fund and ask him to go long...big.

Is this illegal?

 

[MorganSys]

Quote from rufus_4000:


Case in point, WSJ reported last week (or weeks ago) that Citadel currently holds > 50% (!!) of all standing 10-year notes, making the 10 year notes virtually impossible to borrow / lend, and the futures vs cash spread through the roof, and the overnight repo rate to reach astronomical levels (ppl on the repo desks said around 30% annual interest rate for overnight repos). But nevertheless, this is *NOT* illegal.

If the hedge fund had asked for delivery, then it probably would have been deemed illegal...

 

[tomcole]

If you're at all serious, asking for legal advice here isnt really too smart. Go pay a lawyers fees for advice, like all mutual funds, I Banks and large traders do.

Secondly, why would a trader at a large hedge fund gun anything for you unless he was getting kickbacks? Whats the deal ? You buy 10,000 shares at X, and then ask the hedgie to buy 2,000,000 shares at X+? So, basically, you're front-running your friend, and when hes done buying, you're out of your position and he is stuck with a position he cant get out of? Or he faces the reality that a Fidelity sees the volume, the high price and figures theres a buyer and they dump their shares, crushing your pal?

You sound like a complete idiot who wants friends to take significant risk for you, while you waltz around making a little bit of money. And by the way, if your pal loses his job over your "indiscretions", you gonna pay his bills? Educate his kids?

Grow up.

 

[Hydroblunt]

Quote from gunslinger:


I dont know why u believe that "window dressing" is what you defined. Not to be condecending, but look up for your own edification what it is.

Maybe so, that is what I was taught when I was at Merrill's 5th Ave office and by trader who was at a top brokerage firm for years. Whether it is done or not, I've watched FMD go through the process right before the big plunge.

The IPO process was more common before the tech bust, that was mentioned in several magazines and journals. Pretty sure you can do a web search on it. Your comparison to the bucket shops is ironic, where do you think the bucket shops got those pump & dump ideas from. Maybe you think that the I-Banks are squeaky clean, but I think the complete opposite, having worked at a couple and with friends in high positions at a couple as well.

Quote from MorganSys:

Window dressing is just buying stocks that went up and selling the ones that went down; it's not about price manipulation.

Ok now if a mutual fund has a position in XYZ and it has run up into the end of the month, there is no rule that says that they cannot buy more. Many BS reasons they can give, recent strength, new analysis, the moon cycle but when it comes to common sense I can only think of one real reason why it would be done.

 

[ElectricSavant]

Newguy1,

My first thought is, this seems so illegal, it does no even need to be clear. Your at the mercy of the regulators if you get caught.

But I really do not know.

Michael B.

 

[man]

Quote from tomcole:

If you're at all serious, asking for legal advice here isnt really too smart. Go pay a lawyers fees for advice, like all mutual funds, I Banks and large traders do.

Secondly, why would a trader at a large hedge fund gun anything for you unless he was getting kickbacks? Whats the deal ? You buy 10,000 shares at X, and then ask the hedgie to buy 2,000,000 shares at X+? So, basically, you're front-running your friend, and when hes done buying, you're out of your position and he is stuck with a position he cant get out of? Or he faces the reality that a Fidelity sees the volume, the high price and figures theres a buyer and they dump their shares, crushing your pal?

You sound like a complete idiot who wants friends to take significant risk for you, while you waltz around making a little bit of money. And by the way, if your pal loses his job over your "indiscretions", you gonna pay his bills? Educate his kids?

Grow up.

thnx for writing this. saved me a minute lifetime ...