Speaking of conspiracy...
With some implying that the market makers manipulate stocks prices etc and others suggesting it's nonsense, I went to the SEC site and did a WAIS search on "trad* and collusion".
One of the links that popped up:
sec.gov
was last updated in Aug of '96, so maybe some or all of the following snips found at the linked site are no longer true.
Also, I didn't read the whole report so I may be doing someone an injustice. In taking these comments out of context, I maybe distorting reality. If so, I guess I'll get flogged. But hey, I just want to know the truth.
REPORT PURSUANT TO SECTION 21(a) OF THE SECURITIES EXCHANGE ACT OF 1934 REGARDING THE NASD AND THE NASDAQ MARKET
[snip]
During the investigation, the Commission staff requested and
obtained documentary evidence from the NASD, Nasdaq market
makers, and other market participants. The staff reviewed
thousands of hours of audio tapes of traders' telephone lines, which were produced pursuant to subpoenas issued to Nasdaq dealers.
[snip]
The investigation revealed that the Nasdaq market has not
always operated in an open and freely competitive manner. Nasdaq market makers have engaged in a variety of abusive practices to suppress competition and mislead customers.
[snip]
Numerous market makers collaborated without disclosure to their customers in ways that misled and disadvantaged their customers and other market participants. These market makers coordinated their price quotations, their transactions in securities, and their trade reports. For example, the investigation found that some market makers have displayed quotations at prices at which they did not intend to trade in order to help another market maker trade, have orchestrated artificial increases or decreases in prices of trades, and have improperly delayed the reporting of trades to the Nasdaq market for their benefit or that of another market maker.
[snip]
Some market makers, without disclosure to their customers, shared information with each other about their customers' orders, including the size of the order and, on occasion, the identity of the customer.
They also shared information about their inventory positions, trading strategies, and the prices they planned to quote.
[snip]
The investigation of trading in the Nasdaq market recently conducted by the Department of Justice's Antitrust Division found no evidence that the pricing convention described herein resulted from "an express agreement reached among all of the market makers in a smoke-filled room."
[snip]
Although the findings of the Commission's investigation are consistent with that conclusion, one need not determine that the pricing convention arose out of explicit "collusion" to find that the convention had anticompetitive consequences and was harmful to the interests of investors.
[snip]
I wonder if stuff like this still goes on in some fashion? |
