Mark,
While I do feel for those who lost $'s due to the EMLX hoax, I guess I do agree with what the Naz did in allowing all trades to stand. I realize there are lots of good arguments on both sides of the coin here, but to me it would be a very bad precedent if they had went back and reversed the trades.
here is why:
1. First and foremost, where do you draw the line. At just EMLX trades? What about QLGC, BRCD and others. I've seen folks on various boards argue about QLGC and BRCD among other trades also being busted. Shoot, when the EMLX news hit, the whole market started turning red - so why not all trades in all stocks that turned from green to red during that timeframe - as the bogus news had a sobering effect on the market. When it comes down to it, a trader is ultimately responsible for their trades.
2. Is it fair that someone holding EMLX with say a stop set at 90 got taken out on this bogus news. No, absolutely not - and if it was me who was the holder, I would be mad as hell. But it was my prerogative to set or not set that stop, so . . .
3. Is it fair that someone holding EMLX, saw the freefall in process and bailed at 70. No - but again, they made a conscious decision to get out, maybe on the basis of the bogus news, maybe on the basis of the freefall. Again, if it was me, I would be mad as hell, but the fact that a stock can freefall like this did just points out the very shaky nature of the current market environment where everyone bails at the first sign of bad news, and asks questions later. If folks are that eager to bail at the first sign of bad news (and believe me, I have on other fallen stars like HLIT, CTXS and A), well that says a lot towards their lack of conviction in the market
4. Now, is it fair, that some buyer, who had the guts to jump in at 90, and again at 70 to buy the shares the above two hypothetical folks sold be penalized when the stock rebounded. Sure - I would agree, if they were the perpetrators of the fraud, definitely they should not profit from it and be locked away for a long time, but what about all the others who bought in on the way down for whatever reason. These folks took a big risk in buying during the freefall - they had no idea it was a hoax - so why should they be penalized for having either the guts, or luck, or the corjeones to buy in when everyone was running for the exits. For all those who sold, someone had to buy.
Its an interesting dilemma, but I think the Naz did the right thing. Sure, maybe it sets a bad precedent for future fraud attempts - but if the NAZ acted to reverse things, I think it would set just as bad a precedent for other reasons.
BTW, I saw the initial "news" headline on briefing.com about 3 minutes after briefing.com posted it - and EMLX was trading around 107 at the time. Seeing it, I immediately tried to short it - but couldn't, either due to the lack of shares, or the can't short on a downtick rule. I then posted here. If I was successful in shorting it, and things broke differently and say just 5 or 10 minutes later briefing.com posted an error correction (which has happened before - not on something as big as this - but on misreported news) - my short could have backfired on me. If that happened, should the NAZ have stepped in and reversed the trades because of briefing.com misreporting something? They never have before. You rely on information to make a decison - its up to you to decide whether that info is legit.
Again, a real interesting discussion, that I am sure will be the subject of future case studies for some time to come. And I do feel for those long time holders of EMLX who got taken out, but IMO I think the NAZ made the right call for these reasons
PS - I never did get a trade in on EMLX, short or long. Wish I could say I had the guts to buy in when EMLX broke under 50 - but I didn't. Think about it, not sure anyone here did - so those that did buy on the way down did make a real gutsy move. I did however have a chance to buy some QLGC when it sold off in sympathy - and I did profit from that
PSS - Nice to see that you could reestablish your position in EMLX at the same price you got taken out at. Good luck with it - although for now, this incident may tarnish it for awhile (which would certainly be unfair) |
