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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, August 25, 2012

Goldman Sachs--One More Time

There are at least three things that come to mind about the relationship of Goldman Sachs with Knight Capital: 

First, the risks of HFT are obvious when things go wrong and when algorithms become unmanageable;

Second, the rule-making for Dodd-Frank is taking so long that another crisis could occur before the new rules are finally completed.  Besides which, many of the rules seem to have come from bank lobbying;

Third, there is still difficulty defining proprietary trading in a way that the new rules can be clearly applied to prevent it.

It is difficult to believe that such extensive rule-making over such a long period of time will ever come close to preventing another financial crisis.
One last prop trade for Goldman?
By Philip Scipio and Christian Murray - Reuters
NEW YORK, Aug 24 (IFR) - As US regulators put together the final touches to the controversial Volcker Rule, Goldman Sachs' third-quarter results are likely to reflect the benefits of one last proprietary trading hurrah from the purchase - and subsequent sale - of Knight Capital's accidental stock portfolio.

Knight's trading algorithms suffered a catastrophic glitch earlier this month, buying stocks worth several billion dollars. The brokerage turned to Goldman for help and the investment bank is understood to have bought the portfolio at a discount. Analysts expect Goldman to pocket profits of between US$100m and US$230m after unwinding the portfolio.
Read the article here


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