No, it doesn't. Show us any evidence that any hedge fund makes sham transactions between two accounts they both control? That's clearly manipulation. Putting in multiple orders and then canceling them, when anyone can hit those orders, may be something you don't like. You may even call it manipulation, and there's an argument to be made that it is. But it isn't the same thing as what these guys did. At all.
Two Securities Traders Charged In Scheme That Netted $26 Million In Illicit Profits
- Thread starter Nighthawk
- Start date
The big boys who have high profiles friends will never get prosecuted. Same with Former NJ governor (do not remember the name) who used his FXBrokerage's funds but he was not charged...
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http://fortune.com/todd-newman-diamondback-insider-trading/
That meant Diamondback was an obvious candidate for the prosecutor’s scrutiny. The fund had been started a year earlier by two traders, Richard Schimel and Larry Sapanski, who had branched off from SAC Capital. What’s more, Schimel was married to Cohen’s sister. Although Diamondback hadn’t taken seed money from SAC, the connections between the two firms were obvious. (SAC would eventually, in 2013, agree to plead guilty to insider trading and to pay a massive $1.8 billion settlement, but Cohen himself was not prosecuted.)
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http://fortune.com/todd-newman-diamondback-insider-trading/
That meant Diamondback was an obvious candidate for the prosecutor’s scrutiny. The fund had been started a year earlier by two traders, Richard Schimel and Larry Sapanski, who had branched off from SAC Capital. What’s more, Schimel was married to Cohen’s sister. Although Diamondback hadn’t taken seed money from SAC, the connections between the two firms were obvious. (SAC would eventually, in 2013, agree to plead guilty to insider trading and to pay a massive $1.8 billion settlement, but Cohen himself was not prosecuted.)
Mathew Martoma of SAC is sitting in prison for the next 9 years, so it's really not accurate to say the SEC ignores hedge funds. They clearly didn't have the evidence to criminally prosecute Cohen, but did manage to get a pretty impressive settlement which included barring him from commodities trading until 2018. Clearly the SEC has to prosecute idiots who clearly break the law like the subjects of the OP did. They do their best with the more intelligent group but absent some pretty egregious behavior by the hedge funds, none of which I've seen detailed in any post here trashing the SEC, it's very hard to make a criminal case stick.
I'd again ask all you naysayers what specific actions by which specific hedge funds the SEC ignored and what specifically you'd expect them to do with the guy's from the OP?
http://www.marketwatch.com/story/ex...close-to-5-million-cftc-settlement-2016-10-06
In MF Global’s final days, a $1.6 billion shortfall in customer funds emerged. It took more than two years for the trustee overseeing the liquidation of MF Global’s brokerage unit to collect and return the money to customers. Corzine has denied wrongdoing and said he never directed anyone to dip into customer funds.
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He was former governor, ex-Goldman Sachs...
But (different case) Mathew Martoma/Raja Rajarathinam/Rajat Gupta all got sentencing.. .
In MF Global’s final days, a $1.6 billion shortfall in customer funds emerged. It took more than two years for the trustee overseeing the liquidation of MF Global’s brokerage unit to collect and return the money to customers. Corzine has denied wrongdoing and said he never directed anyone to dip into customer funds.
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He was former governor, ex-Goldman Sachs...
But (different case) Mathew Martoma/Raja Rajarathinam/Rajat Gupta all got sentencing.. .
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From what I read, they weren't making transactions between their own accounts - you can't make $26M trading with yourself! They were putting in lots of small orders that seemed to have tricked the market makers into outbidding them and eventually they traded with the market makers at more favorable prices. Sounds like the same HFT penny-jumping that the institutions complain about and that forces them to cross the spreads to the waiting HFT bidders and get worse prices.
Costing the market makers big money is what gets you prosecuted these days.
Sounds like you don't want market makers to make a profit? Have you ever traded anything where there wasn't enough profit in it to attract market makers? Single Stock Futures are a great example; no market makers=no market. Seems that we'd want those who put market makers out of business through manipulation to be prosecuted, no?
The market makers must be doing just fine if they've got $26M to lose. You want market makers who are smart enough that they take advantage of jerks like this. If anyone actually knew what the stock was worth, these sorts of tricks wouldn't work - either they wouldn't succeed in tricking people to pay more for it, or if they tried to manipulate it up more than fair value, someone would trade against them and they would lose money.
Neither money makers or anyone else "knows" what a stock is worth. I think you can find "fair value" right next to the unicorn in the leprechaun forest. It's a market, the whole point of a market is that supply and demand determines price. Market makers are just trying to balance supply and demand and provide a liquid market, they really have no opinion of the "worth" of a stock and it's pretty unimportant to them what it actually is given their business model. It's pretty crazy to expect them to be "smart enough" to detect purposeful manipulation of supply and demand done by opening multiple fake accounts, although I'm guessing they probably did eventually detect and report it. That's the job of the SEC, which they did despite a bunch of folks on this board who are somehow mad about that.
Perhaps I like a good Underdog story, Sig... That said, How the hell can you defend a hypocritical entity like the SEC ?.. the bully that kicks the handicapped kid when he is down but lends a helping hand to the kid that tripped him up in the first place with the anticipation of future favors. SEC insulates the true criminals while seeking the low hanging fruit to hang at the market square while puffing out their chests & slapping each other on their collective asses for doing a stellar job, once again.
You're asking them to ignore a blatant, cut and dry violation of the law that any prosecutor will tell you is easily winnable. Having sat in the shoes of a Federal employee I understand that you just can't do that when your job is to prosecute these types of cases. In every event it's important to understand that failure to act in one part of an agency should have no bearing in if the rest of the agency does it's job. That's like saying the LA DA didn't prosecute Roman Polanski aggressively enough so what the hell are they doing still putting pedophiles behind bars in LA.