PLS5,
Assuming that there are no obviously irregular patterns of buying/short selling at some period leading up to a fraudulent occurrence such as this one, what would you, if king for a day, suggest toward an end of both punishing wrongdoers and not weighing heavily on legitimate position holders?
The real shame in all of this, IMHO, is that the actions of those in power to suspend trading, and then decide to let trades stand are inconsistent. Anyone who lost on this thing because they bailed out of a long position at a huge loss thinking they might recover buying back in at a lower price had their opportunity taken away by the regulators who forced a discontinuity in the price by their action, then declared everyone had to live with the consequences.
As bad as the response to the fraudulent report is, at least active traders had some chance to respond to the accelerated flow of the market. They were denied the opportunity to benefit from that flow when the hoax was exposed. Had trading not been halted, at least the market would have maintained continuity during the rebound as the news of the hoax was disseminated. Some degree of stability in the rate of change of price would, IMHO, be a reasonable metric for deciding at what point to cancel trades. Sure this is a volatile stock, and there have been some ups and downs over the last several days, but nothing like what was precipitated by the bogus news this morning. Canceling today's trades might not be sufficiently punitive to the perpetrators, but that should no be the purpose. It should be done to protect the innocent from devastating losses. When the perpetrators are found out (hopefully) punitive measures can then be taken. As for those who reaped innocent rewards from the anomaly, the lost windfall might not be pleasant, but it's not going to wipe them out or seriously change their net worth compared to last night.
Dan |
