It's not prison, it's Club Fed. I will bet any amount of money that given the choice, this guy would take 10 years at Club Fed over 1 year at Rikers. I will also bet that if these guys actually were sent to max security, even for 3-6 months periods, you would see these abuses seriously diminish. They'll learn the meaning of the term "screwed" in a very literal sense.
It went something like this...... "I'm a buyer of a million Motors......" "What a coincidence. So am I." Let the guys coming up know what the penalty is. TS.
I read the article but since I am not a trader like most of you here, I do not understand what he did..can someone please explain it to me in terms I can understand what he did wrong or illegal? And in the article, it said he was very well liked etc...and very successful, so why did he have to do bad things and risk prison if he was already successful?
He was front running, Front running is the illegal practice of a stock broker executing orders on a security for his own account (and thus affecting prices) before filling orders previously submitted by his customers. After the broker has made his original transactions, he can expect to close out his position at a profit based on the new price level. Front running may involve either buying (where the broker buys for his account, driving up the price before filling customer buy orders) or selling (where the broker sells for his account, driving down the price before filling customer sell orders). Contents For example, if a broker buys himself 20,000 shares of a stock for $100 per share just before buying a large block of 400,000 shares for a customer, he may drive the price up to $102 per share. If the broker is able to sell his newly purchased shares at $101.75, he will have made $35,000 for himself in a few minutes. This $35,000 is likely to be only part of the additional cost to the customer's purchase caused by the broker's self-dealing. The broker has put his own financial interest above (or in front of) the customer's interest and is thus committing fraud. In the U.S. he might also be breaking laws on market manipulation or insider trading.
Not quite right here. He was not charged with front running but rather trading ahead. The difference being he was a specialist not a broker and was found guilty of putting his firms trading account before matched public orders. He probably gained by getting a larger annual bonus based on his yearly trading gains for the firm's account than would have been realized without interpositioning. This was not his personal account. Anyone who has traded NYSE extensively in the box knows specialists do this all the time, it is one of the only ways they still make money. He just happened to be a little too blatant about it and got slapped. IMO this is the system that has been created and human nature dictates these abuses will happen. If you want to throw him away for 30 years you might as well lock all of them up. Or change the specialist system.
or if some unlucky souls all put in market orders at once, they are at the mercy of the specialist. the specialist will gap up the stock as high as possible and can get short off the fill. and then gap the stock back down. and vice versa. if you watched DE trade a few days ago, that stock was gapping 50 cents - 1 point up and down all morning. so lets say people want to take profit on their long positions and they market out well before the crowd does. the specialist can freeze the stock for a minute and let more and more longs get shaken out and they all go market. the specialist will lock their orders so they cant cancel, gap the stock down 1 point and print it all. meanwhile he will buy up all stock being sold and get long 5,000-50,000 shares, gap the stock back up and he is in the money 1 point already. market orders are a specialist's best friend.
While this might be how specialists make their money, this is not illegal and at least serves a function that they are required by mandate to fufill, provide liquidity when none exists. If everyone enters a market order at the same time is it unlucky or is there an event behind all the orders. The specialist steps in to print all the orders in the hole but who is to say another sell wave won't follow making that fill (and the specialists new long inventory) look good (bad). Specialist is at least taking a risk. Trading ahead is a entirely different (riskless) game, that is why his trades had a 90%+ success rate.
didn`t eliot spitzer just the other day drop charges on like 13 specialists.......i agree this stuff goes on every day........and much worse.....its so arbitrary who they decie to "make an example" out of...............its like skilling gets 25 years........and fastow gets 6 and he was the one who comitted all the crimes (blatant). but its like he irs......when the govt. wants to it can make law
Wah wah wah. It's always good to have a scapegoat to mask your incompetence, eh? You know, Hitler found the Jews most convenient. Front-running is but one arrow in the specialist's quiver. Only impacts those active at the moment. Consider the basic opening GAP. Up or down. Affects but not necessarily impacts ALL involved. With the stroke of "his" proverbial pencil, the specialist can literally add or evaporate millions. Includes cleaning out all stops. Order imbalance? Only in your head. Real imbalances entail halts or delayed opens (and in the case of "bad" news to locate shares to short). More like maneuvers to dispose or acquire inventory WITHIN the entire float. All three pale to broader, sometimes multi-year campaigns enriching specialists' tax-segregated omnibus accounts. Dwarfs day by day front-running. I see lots of clowns chest pounding about the present bull leg. Confusing their brains and .....eh...........investment merit with merely being along for the ride. "Fair and orderly market?" Hollow adage on par with "it's management's function to maximize shareholder value". Maybe you believe in bags of magic beans. Well, just ask for Jack. This is a predator/prey arena. and the merchandising of paper. Hmmm, perhaps you might give more thought to the mechanics of price movement rather than banging out dimes on impulse. As for this clown getting 3 x 10 years. So what? Won't put any money in YOUR pocket. Nor will it compensate for continued incomptence. Good traders extract, bad ones whine.