There is no practical way to separate price pressure coming from legitimate buying and selling to acquire a position from that due to buying and selling where the price pressure is an end in itself. It is perfectly legal to push prices around by buying and selling. You're entering into an area of law with high probability of error when you attempt to get into the mind of a perpetrator. We have sometimes tried to do it (hate crimes for example), but it is still a bad idea in my opinion. Consider runs to take out stops. This happens routinely. There is no intention to take a position and hold it. One is simply taking out offers (or hitting bids) to push price all the way to where stops are clustered; thus when pushing price up you are a buyer until you reach a ready cluster of stop loss orders to sell into. It is perfectly legitimate and is an expected part of market behavior. Those with deep pockets and lots of leverage do the heavy work, and small retail traders jump aboard for the ride. Trading is not like Sunday School. If you wanted a market that was free of price manipulation it would be nearly impossible to achieve it. A major step in that direction, however, would be to separate into five independent activities, money managing/financial advice, underwriting and promotion, market making, brokering, and trading. Thus a broker could not trade. A trader could not give buy/sell advice, etc. The idea would be to try and eliminate the terrible conflicts of interest that are part and parcel of Wall Street. I don't see any possibility of that happening. Goldman Sachs is going to go on telling you to buy when they want to sell! We just have to expect this if we want to be involved with the markets. The other approach is just to simply require that everyone engaged in this business for profit be required to issue a warning to all their clients that virtually the entire financial sector is rotten to the core and conflicts of interest are the rule rather than the exception!. Caveat Emptor.
They do - but on a very very small level. Consider a very large holding: say 10MM shares of XYZ with a trading volume of 50k shares per day. They can jam the stock with 50k extra shares at the close (or even less perhaps) thus making their positions 10,050,000, only a 1/2% increase in their holding of the stock. Doesn't really affect the book, but affects valuation based on the closing price. What's really stupid is that you value based on some close # without realizing that there is no liquidity at that price. Stock bid ask 10x11 doesn't mean you can sell at 10 if you have 100,000,000 shares. And if you talking last sale - that number is meaningless. Most people don't understand this (and won't) and this practice will continue forever
I agree with a lot of what you say, what I am arguing for is consistent treatment. Either manipulation is ok or it isn't. If it isn't, then these people need to be prosecuted, where possible, for doing it at the end of each quarter. It's quite obvious and blatant in many cases, and I am sure there are electronic trails (IMs, emails, phone calls etc). Either make it all legal, or prosecute the clear violations. Not the current approach of 'it's illegal, but we don't give a shit'.
It's pretty difficult. However, the point is that the change in the trading book is a by-product of the manipulation, rather than its purpose. The purpose is to juice the EoQ performance numbers, not to own more stock. The fact that more stock is bought is simply a necessary evil from the perspective of the manipulator - if they could jam the close without buying anything, they would.