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Is this Illegal?
- Thread starter newguy1
- Start date
...Whether its legal or not is dependant on how it is done...if u call up your buddy who is a trader at a large HF and say I am long Harry's Hot Pastrami Inc. and think it is a good buy b/c they make the best pastrami and are going to be a great company and you s/b in this stock, then that is perfectly legal. However if you call up your buddy and say, listen, i am long HHP, why dont you do me a favor and buy 50,000 shares so i can make a quick buck and I'll kickback some cash to you personally or scratch your back in some market related way, then that is clearly illegal. Of course this type of thing happens all the time and most of the time people get away with it...but that dosent mean people don't get caught and fined, have liscences revoked, get fired, etc. In short, if you need to be involved in a criminal activity, this is probably a pretty good one as opposed to say, robbing a bank or something, however I always have felt that a good trader can make enough money without resorting to such shenadigans.
Quote from Hydroblunt:
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.
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.
strategy used by mutual fund and portfolio managers near the year or quarter end to improve the appearance of the portfolio/fund performance before presenting it to clients or shareholders.
Performance reports and a list of the holdings in a mutual fund are usually sent to clients every quarter. To window dress, the fund manager will sell stocks with large losses and purchase high flying stocks near the end of the quarter. These securities are then reported as part of the fund's holdings.
Another variation of window dressing is investing in stocks that don't meet the style of the mutual fund. For example, a precious metals fund might invest in stocks that are in a hot sector at the time, disguising the fund's holdings, so clients really have no idea what they are paying for.
Window dressing may make a fund appear more attractive, but you can't hide poor performance for long.
It`s all in the approach. Stock pools that are created to "corner" or sustain an artificial price are illegal and considered manipulation. But, if you are just a large buyer who happens to drive the price up while accumulating..well this happens everyday. And, if you are feeding it back out on the way up...all the while there is "a change in beneficial ownership"..i.e NO painting of the tape..well this also happens everyday and is legal.
HYdro, I def dont think the invesment banks are lilly white. They have done some incredibly shady chit, I believe more so in the past, than now. Sure they had analysts write biased reports, but that was more so to keep interest in stocks that they had an investment banking interest in, as opposed to them pumping the stock price up, so they can dump. They give stock to their brokers at times at the bid or even below the bid, and let them sell to clients at the offer plus mrk up, and let the brokers keep the spread (back when spreads were spreads). Most of this was done to keep the deals coming, not so much to give the firm a fat profit on their position. In the bucket shops, the firms would manipu;ate the price of some dog chit, 1 million share float stock from 5 to 15 ONLY so they could dump their stock.
Quote from wareco:
Hell yes.
http://caselaw.lp.findlaw.com/casecode/uscodes/15/chapters/2b/sections/section_78i.html
Everyone should read the link given above under 1).
That paragraph states it shall be illegal to create a "false and misleading appearance" with regard to the trading activity in a stock. That is one of the biggest tools in the toolbox of the NYSE specialist. Making a stock look weaker so that he can buy, and vice versa. As a matter of fact, if you are in the business of hiring NYSE floor specialists, you *fire* him if doesn't "create a false and misleading appearance", and you get someone who will.
I'm not sure, but you might have assumed a little much. Its different if he is a partner, not some employee/friend; "who's going to pay for my "indiscretions"". Its his choice. To hire, to fire, to do as he pleases.
And I am not in the position to question anything. But the next time you feel like blowing the whistle/crying wolf when nothing is even wrong, you take a stab at it and let me know.
Legal fees? LOL.
(thats really all I can do when there are so many hateful (yes, that is exactly what it is. No, not complaining, whining, or critical. Just hateful. There is so much of this on this board.)
Good luck tomcole.
And I am not in the position to question anything. But the next time you feel like blowing the whistle/crying wolf when nothing is even wrong, you take a stab at it and let me know.
Legal fees? LOL.
(thats really all I can do when there are so many hateful (yes, that is exactly what it is. No, not complaining, whining, or critical. Just hateful. There is so much of this on this board.)
Good luck tomcole.
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.
As far as I am aware you will not be allowed to open positions relating to a particular share price if to do so would result in you, or other acting in concert together, having an exposure to that share price which is equal to or exceeding the amount of a declareble interest in the relevant company.:eek: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?
Hey:
I see that you folks are still beating this horse to death.
Let me help you a little bit.
First, the answer you are looking for is "Yes" it is illegal
Second, I refer you to one of two resources. You can check with the Securities and Exchange Commission, or you can check with the Attorney General of the State of New York, where the honorable Elliot Spitzer has a team of folks working on these cases. If you have knowledge of such manipulation going on, they will take time to explain it to you in detail.
Finally, some of you may remember that Citigroup was fined (big fine) for using the same tactics to manipulate the bond market.
Use Google or get back to me with a PM if there is any controversy.
Bye
Steve
I see that you folks are still beating this horse to death.
Let me help you a little bit.
First, the answer you are looking for is "Yes" it is illegal
Second, I refer you to one of two resources. You can check with the Securities and Exchange Commission, or you can check with the Attorney General of the State of New York, where the honorable Elliot Spitzer has a team of folks working on these cases. If you have knowledge of such manipulation going on, they will take time to explain it to you in detail.
Finally, some of you may remember that Citigroup was fined (big fine) for using the same tactics to manipulate the bond market.
Use Google or get back to me with a PM if there is any controversy.
Bye
Steve
Yes, this IS illegal....but moreover it is stupid