Time for the bunch of you to straigthen out or be gone..!
OT: SEC Proposes New Rule To Expose MM Activity
By Jack Burney
Published by OTCNN.com
07/27/2000 07:25 AM CST
All the letters and e-mails must have had an effect, because the Securities & Exchange
Commission is proposing a new
two-part rule that would virtually end Market Maker Manipulation. The rule would
(1) Make brokers reveal which market maker they use to execute buy or sell orders for
investors, and
(2) Force market makers to post monthly reports that expose whether trades are being made
at the best available price.
Such a rule would subject any attempt at MM manipulation or excessive shorting to the light of
public scrutiny, and, in effect, bring
an end to the worst of the scourge that has suppressed stock prices, according to their
stockholders, since March.
The rule could go into effect before year’s end.
SEC officials were shocked at the unprecedented deluge of investor complaints that flooded
the agency when it asked for
comments of a series of vague proposals for rule changes. OTC News Network joined the
movement, to report its progress and
encourage reform, and hopefully, added to the deluge.
To the surprise of investors who despaired that the SEC would ever act, the agency’s
regulators came up with a rule that strikes
at the heart of MMM.
It was vindication of a sort for investors whose complaints were ridiculed by some brokers and
traders and paid bashers.
The SEC said that in 85% of the trades made, investors do not get the best price. If a trade
exceeds the best price by even the
smallest increment – 6.25 cents – an investor loses $62.50 on a 1,000-share trade.
SEC said it suspects that some brokers may be “selling” their orders to MMs who pay them for
the business, instead of routing
them to centers where the best price can be obtained.
SEC action follows the settlement of a class action lawsuit brought by investors against
Charles Schwab, the largest online
broker, for failing route buy and sell orders to market makers with the best price, and failing to
disclose payments received for the
placement of those orders. |
