a joint-effort by all mm to drive the price down... Just before the convert press release, the stock price started to move up and did even after the press release for another 1-2 weeks. After that it just went down almost 60 %.
Marginnayan, joint-effort, sure, but evil conspiracy, no. Say you were a market maker. As such, you would know how to parcel out blocks of stock in a large transaction, be it from selling actual shares or facilitating a short position on behalf of a client. Therefore, it stands to reason you would recognize when a colleague is doing same. What purpose would it serve you to get in the way (i.e. to somehow find a way to keep the share price from plummeting)?
People need to understand that MMs make money on the spread, and therefore their primary goal is to stimulate volume by finding a price where there is an equal amount of buying as selling. At the end of the day their goal is to come out flat (i.e. not be long or short any stock). Therefore, when they sense extreme selling pressure coming from another MM, it makes no sense to take in more stock (i.e. from panicked investors trying to dump). Thus, what appears like a conspiracy is really just good business practice.
If you are looking for a villain, as most people who blame the MMs usually are, I'd concentrate on the people running the publicly traded company in question as well as the people they've chosen to help finance them. I'm not saying the MMs are squeaky clean, I'm saying they are not really at the top of the food chain so to speak.
- Jeff |
