Market Maker Blocks Progress Of Market Maker-less Alternate Stock
Exchange
By Jack Burney
Published by OTCNN.com
06/29/2000 07:58 AM CST
They’re here, says the frustrated receptionist at Wamex Holding, Inc.
(OTCBB: WAMX), but they can’t talk.
Wamex executives were silenced by an SEC subpoena, part of a complaint
lodged against them by Market Maker Herzog, Heine, Geguld, Inc. (HERZ)
within
hours (some say 30 minutes) after the company’s first commercial for
its new ATS alternate trading system was aired on CNBC. SEC halted
trading in WAMX until June 27, but no resumption of trading has begun.
Even hardened Market Maker watchers were awed by the display of HERZ’s
raw power
over SEC, and its ability to command instant obedience from that
government body. Market Makers usually act in secrecy, but here was an
announcement of a system that would cut them and their methods out of
the picture entirely, and they moved quickly to intercept it.
The SEC said there were questions about Wamex's ability to comply with
commission rules for its trading system, and about funds purportedly
raised from private investors. There has also been recent market
activity in WAMX stock that may be the result of manipulative conduct
or other illegal activity, the SEC said.
Wamex investors were adamant. Said one investor, It is my belief that
it is not coincidence that they (Market Makers) pulled the plug on
Wamex trading
on the day in which the stock would have reached the $3 range. They
stood to lose millions. Someone must expose these guys!
Another Wamex investor told OTC News Network, One of the major
attractions of this (ATS) product to so many shareholders and stock
traders is that it is supposed to eliminate the market maker in the
trading process, allowing trader to trader activity without brokers or
market makers. It is the strong feeling of some of the shareholders,
including myself, that this whole situation with Wamex has occurred
because of market maker short positions in this stock when it started
to make a run up.
Wamex had planned the CNBC advertising campaign beginning June 14 with
commercials promoting the launch of its ATS Technology. They were
scheduled to run through July 30, but were instantly suspended. The
company was set to launch a membership drive on July 4th, offering to
provide investors 24/7 access to trade all registered securities at
low cost with price enhancement capabilities and anonymity across
borders.
Mitchell Cushing, CEO of WAMEX Holdings, Inc. said (before being
muzzled by the SEC), Advertising, early registration and registration
drives will give Wamex critical information necessary to assess the
prospective user base so that we can properly configure the
engineering, service and support prior to the presentation of the
technology." The system would purportedly reduce spread exposure by
eliminating the middleman.
Never before has a securities firm opened its limit order book to its
clients, but Wamex says the ATS not only does this, but also displays
its orders to the whole world. ATS would allow investors to trade
amongst themselves; therefore eliminating the losses associated with
proprietary trading so commonly employed against individual investors.
Nobody has questioned whether ATS works. The SEC’s concern is that it
may not comply with SEC requirements. If it does work as suggested, it
could cut the MMs out of trading in OTCBB and other stocks.
What lengths will MMs go to in order to prevent ATS from ever becoming
reality? |
