Exactly.
The core of the SEC's case/reason for the current reforms in the
OTC market was this activity coupled with collusion by the market
makers in a stock. (You do not lower your bid on my long poistion,
I won't lower my bid on your long position, or vice versa.).
While it would be crazy to say this never has happened, IMO, it
is not the way business is usually done. I have seen market makers
"take a bath" in a stock. Seen it, read about it, heard about it, etc.
As I have stated here before. Being a market maker is NOT a big deal.
You need $250,000.00 net capital. If it were really all that easy,
there would be a lot more players in the game. Unfortunately, just
like most industries, there are fewer players. The big guys keep
swallowing up or driving the little guys out.
I am NOT accusing nor even implying ANY wrong doing on their part, but
you would be amazed at how many stocks the big guys like Merrill,
Bear, Smith Barney, et al make a market in.
Doug |
