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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Saturday, May 8, 2010

More Goldman Market Rigging?

Here's the latest from Ellen Brown:

Stock Market Collapse: More Goldman Market Rigging?

Last week, Goldman Sachs was on the congressional hot seat, grilled for fraud in its sale of complicated financial products called "synthetic CDOs." This week the heat was off, as all eyes turned to the attack of the shorts on Greek sovereign debt and the dire threat of a sovereign Greek default. By Thursday, Goldman's fraud had slipped from the headlines and Congress had been cowed into throwing in the towel on its campaign to break up the too-big-to-fail banks. On Friday, Goldman was in settlement talks with the SEC.
Goldman and Wall Street reign. Congress appears helpless to discipline the big banks, just as the European Central Bank appears helpless to prevent the collapse of the European Union. . . . Or are they?

Suspicious Market Maneuverings

The shorts circled like sharks in the Greek bond market, following a highly suspicious downgrade of Greek debt by Moody's on Monday. Ratings by private ratings agencies, long suspected of being in the pocket of Wall Street, often seem to be timed to cause stocks or bonds to jump or tumble, causing extreme reactions in the market. The Greek downgrade was unexpected because the European Central Bank and International Monetary Fund had just pledged 120 billion Euros to avoid a debt default in Greece. Strategically-timed ratings downgrades of this sort are so suspicious that Indian market regulator SEBI recently created a stir by asking the rating agencies operating in India for periodic reporting concerning their fees and rating norms.

Markets were roiled further on Thursday, when the U.S. stock market suddenly lost 999 points, and just as suddenly recovered two-thirds of that loss. It appeared to be such a clear case of tampering that Maria Bartiromo blurted out on CNBC, "That is ridiculous. This really sounds like market manipulation to me."

Manipulation by whom? Markets can be rigged with computers using high-frequency trading programs (HFT), which now compose 70% of market trading; and Goldman Sachs is the undisputed leader in this new gaming technique. Matt Taibbi maintains that Goldman Sachs has been "engineering every market manipulation since the Great Depression." When Goldman does not get its way, it is in a position to throw a tantrum and crash the market. It can do this with automated market making technologies like the one invented by Max Keiser, which he claims is now being used to turbocharge market manipulation.

Whether Goldman actually crashed the market in this case will be left to conjecture, but Keiser explained in an email how it could theoretically be done:

Remove all the buy orders that you control (since HFT traffic is 70% of the order flow, if you simply pull your HFT buy orders, you remove a huge chunk of the market - in a heartbeat - leaving a sudden price vacuum). If you wanted to scare congress to vote the way you wanted them to vote - a congress that is directly invested in stocks trading on the exchange and ETF's tied to the prices on the exchange - just pull your buys. When they do what you want them to do - replace your buys. If you want to make the market go up - pull your sell orders. It works both ways. (It's all detailed in my Virtual Specialist Technology patent - how to make markets in an 'infinite inventory environment.')

Goldman was an investment firm until September 2008, when it became a "bank holding company" overnight in order to capitalize on the bank bailout, including borrowing virtually interest-free from the Federal Reserve and other banks. In January, when President Obama backed Paul Volcker in his plan to reinstate a form of the Glass-Steagall Act that would separate investment banking from commercial banking, the market collapsed on cue, and the Volcker Rule faded from the headlines.


Read the rest here


Anonymous said...

Remember when the Goldman crowd took over NYSE.
Remember the takeover of SLK.

Lloyd said he liked his HFT trading business.
Why not?...they got every corner covered.

This interview goes with above article.

On the Edge; guest is Ellen Brown to talk about High Frequency Trading and more.

JR said...

Max Keiser interviews Ellen Brown about market rigging. If they are correct, why would anyone "play" the market?

JR said...

Oops, sorry. That's already been posted. Maybe it should be viewed twice anyway.

Anonymous said...

Is it any wonder people keep coming back to the blogs?

Financial Entertainment TV is a sham and it showed this week as they tried to package a Procter & Gamble (PG) mis-trade as being the cause of the sell-off. The talking heads never want to dig at the truth, which is that markets are driven largely by emotion and the media is used by vested interests to stir it up.

Yes, the media – much of it anyway -- has fallen into the role as pimp for a bevy of prostitutes, being Humungous Bank & Broker (HB&B), private equity, hedge funds, mutual funds, and others who sell their so-called financial ‘services’.

The media is aware that mis-trades happen all the time, every month in fact, usually when people are distracted or agitated. In other words, mis-trades are a result, not a cause.

What upsets me most is the cover-up -- that the media is paid to divert people’s attention to the real drivers of market prices, only giving the johns enough of a look to keep their attention on the marketing.

Yes, markets have become marketing – I say that all the time. It’s a disgrace because the capital market should be the workplace of the owners of capital, not the financial services industry and their shills. Legislators and regulators don’t see the problem here because they have been coerced or bought off by the financial services industry. Plain and simple.

Did you not feel this event developing in the past two weeks? I did, and moreover I told you all, not once but several times.

Anonymous said...

Comic strip says it all..

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