Lawsuit Mutual funds vs. NYSE/Specialist

I wonder why so many people are interested suddenly in corruption ... perhaps that it impacts their money or trading style :D

How can you think to stop them since you seem to tolerate the corruption in other fields: for everything is linked. The corruption in stock market is done by the same persons that are acting on a more general plan. If you have read carefully some details in the news the impact of this lawsuit is that the Auditing Companies will increase their fees by 100% towards the audited companies and who will pay finally these auditing fees : the consumer as usual :D. For if you think that WS is making a scandal upon himself just for you especially when the actual SEC chief has been their attorney before being nominated you naïve :). Double-talk is their specialty.
 
The reason the mutual funds haven't sued is that they have been bought off by the order execution industry with soft dollars.

Soft dollars are kickbacks based on order flow. You pay for it through higher execution costs. Soft dollars are suppose to pay for research, software etc. but they are basically used for anything. The mutual funds then take the money they would have spent on research, software etc. and spend it on expense accounts, nice furnishings etc.

Everyone has been bought off in this system. Everyone except you the individual investor - you are not suppose to know these things so you can continue to be milked.

The only way I know to fight back is to constantly harangue the regulators - CFTC, SEC and copy your congressman. That is the most powerful leverage you have as an individual.

Players who have a stake in keeping things going as they are will try to discourage you from doing this. They will call you names, say you are a loser, wasting your time, blah, blah, blah.

In reality, this is the only way historically that individuals have gotten anything favorable in the markets.
 
Quote from Tea:

The reason the mutual funds haven't sued is that they have been bought off by the order execution industry with soft dollars.

Soft dollars are kickbacks based on order flow. You pay for it through higher execution costs. Soft dollars are suppose to pay for research, software etc. but they are basically used for anything. The mutual funds then take the money they would have spent on research, software etc. and spend it on expense accounts, nice furnishings etc.

Everyone has been bought off in this system. Everyone except you the individual investor - you are not suppose to know these things so you can continue to be milked.

The only way I know to fight back is to constantly harangue the regulators - CFTC, SEC and copy your congressman. That is the most powerful leverage you have as an individual.

Players who have a stake in keeping things going as they are will try to discourage you from doing this. They will call you names, say you are a loser, wasting your time, blah, blah, blah.

In reality, this is the only way historically that individuals have gotten anything favorable in the markets.
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Why doesn't that surprise me?

:cool:
 
Just a note. I think the NYSE in general is a fair marketplace, with problems like any other organization. The role of the NYSE specialist has always been subject to debate. Can the dealer handle public orders and trade for his own account with no conflict of interest? Can Dick Grasso , NYSE head, be fair to investor's if his pay is decided by the companies he regulates?

In 1987 when the market sold off over 500 points in one day, many traders could not get through to NASDAQ MM's(they wouldn't pick up the phone), but the NYSE was still maintaining a "fair and orderly" market. Once trades are executed in a central marketplace, in my opinion, it is easier to regulate. NASDAQ is a fragmented marketplace, and it may be harder to
regulate when 20 major MM's are handling one stock.

I find it interesting that most traders complaints happen only when the market goes "South". When the markets going up
and everyone is making money, no one complains about the self interests of the NYSE specialists or Dick Grasso's fat paycheck.



Gene Weissman
E-Brokerage, LLC
gene@ebrk.com
 
Quote from Gene Weissman:

Just a note. I think the NYSE in general is a fair marketplace, with problems like any other organization. The role of the NYSE specialist has always been subject to debate. Can the dealer handle public orders and trade for his own account with no conflict of interest? Can Dick Grasso , NYSE head, be fair to investor's if his pay is decided by the companies he regulates?

In 1987 when the market sold off over 500 points in one day, many traders could not get through to NASDAQ MM's(they wouldn't pick up the phone), but the NYSE was still maintaining a "fair and orderly" market. Once trades are executed in a central marketplace, in my opinion, it is easier to regulate. NASDAQ is a fragmented marketplace, and it may be harder to
regulate when 20 major MM's are handling one stock.

I find it interesting that most traders complaints happen only when the market goes "South". When the markets going up
and everyone is making money, no one complains about the self interests of the NYSE specialists or Dick Grasso's fat paycheck.



Gene Weissman
E-Brokerage, LLC
gene@ebrk.com
More...


Last I looked the markets are well off their lows and yet many traders are complaining about the mistreatment of the auction process by certain Specialists. I don't trade NYSE so I'm not saying whether these allegations are valid or not. However my recollection of 1987 is a bit different than your's Gene. True MM's laid down and yes several NYSE Specialists blew out, but a report published by the SEC after the crash detailed that some Specialists were NET SHORT on black Monday! Also I would have a difficult time calling a 21% one day decline "fair and orderly". In fact the 1987 crash was DOUBLE the previous record setting pct. decline. Someone once told me that based on a sample of 30,000 or so trading days with a previous worst day decline of 11%, the chances of a 21% break in a single session would be over a million to one. If someone could publish some available numbers concerning Specialist's profits from Oct. '87 I would love to see them.
 
Pabst,

This is an interesting topic. I was just giving an exampe of a fragmented market (NASDAQ) vs a centralized market place(NYSE).

When the market goes one way, as a former floor MM, I can tell you that most traders will lose money. Remember, as an exchange specialist on the NYSE, you are a forced buyer all the way down! If you come in "short", you will get long very quickly , if the markets keep trending lower (Black Monday 1987). Most NYSE specialists lost big money in Oct. 1987 sell off.

Being a specialist can be a big advantage,but not in a market that goes down 20% in one day . If you are a "forced" buyer in a down market, you will lose money. You can't get short qucik enough.



Gene Weissman
E-Brokerage, LLC
gene@ebrk.com
 
Or the Specialist can let the stock trade based off the supply and demand in the market place. I wasn't trading in '87, but I'm sure a major reason why the market went down 20% in one day is because Specialist's weren't performing one of their primary functions of creating a fair and orderly marketplace. Kind of like a couple years ago when the fed had a suprise interest rate hike of 50 bbp's, and stocks like IBM shot up 9 points in one trade.
 
Quote from axeman:

Buffet has recently been taking pot shots at ceo pay.
Has been urging shareholders to revolt against this as
well as some other things. Caught it on the news.
Also said he wasn't getting back into equities for a loooong time.

peace

axeman
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Well you're right. I had not seen all his comments when I posted. He has said some useful things about CEO pay and the options culture. He has also admitted that he often went along with this crap on boards just to not be a boat rocker.
 
From what i've seen, I dont buy this argument.

Are there rock solid rules that state EXACTLY how much
a specialist MUST buy on the way down?
Are there rock solid rules on how much he can gap the price
in panic mode?

When the market turns suddenly, these guys give you
100 shares and then move the price 20,30,40,50 cents.

How much pain do they really have to eat? Doesn't SEEM
like very much. Here is your measley 100 shares, ill drop
the price 50 cents, here is another measely 100, ill drop
the price 50 cents... wash rinse repeat. Crash is over and
I didnt eat too much shit.

Please educate me on what i'm missing.

peace

axeman



Quote from Gene Weissman:

Pabst,

This is an interesting topic. I was just giving an exampe of a fragmented market (NASDAQ) vs a centralized market place(NYSE).

When the market goes one way, as a former floor MM, I can tell you that most traders will lose money. Remember, as an exchange specialist on the NYSE, you are a forced buyer all the way down! If you come in "short", you will get long very quickly , if the markets keep trending lower (Black Monday 1987). Most NYSE specialists lost big money in Oct. 1987 sell off.

Being a specialist can be a big advantage,but not in a market that goes down 20% in one day . If you are a "forced" buyer in a down market, you will lose money. You can't get short qucik enough.



Gene Weissman
E-Brokerage, LLC
gene@ebrk.com
More...
 
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