Bob,
I did some more reading and while slightly pissed, not deterred. By reading the actual findings of the SEC, the actions, transcripts, and methods used by market makers I find the following:
1. The SEC was unwilling to take action against the NASD as noted by the time delay of when the studies and investigations were done and the time it was made public.
2. The market makers "traditional method" of price fixing will continue to exist until trades are anonymous between them at least at the time of execution.
3. The SEC would be far more effective if they statistically monitored market maker activity, starting immediately, either weekly or monthly and based disciplinary actions and fines on those findings where improvement in spreads and late execution are not evident to a given timetable. (they do have computers don’t they?) Since the illegal practices are through private phone calls, industry contacts, and the "old boys," it is almost impossible to consistently monitor the personal activities of the market makers, (which seems to be from where the problem stems) and monitoring could be easily circumvented using email and networks, yet the results of their actions can be documented, traced, and rules enforced.
4. It was also stated that some customers have direct access to market makers and their trades receive favorable treatment (I did not mention Hillary Clinton). The identity of the market makers for issues sold on the NASDAQ should be public information and readily available to us little guys, too.
5. Giving the NASD 12 months before another review by the SEC is ridiculous since these practices have been evident for 5 years.
6. Marker makers have a built-in profit system of the bid and ask prices yet they still are greedy enough to set these to levels that only screwed the private investor over the years and in comparison the 100 million they are now being required to spend on enforcement of their own rules is "small change."
I did not recently get active in the stock market to get rich, but out of self defense. If the high paying jobs are leaving the country, then I feel I must study the 10k and q’s of the various companies to invest and share in the profits of the companies as a whole since they would not share it with me as an employee. A totally even playing field is to much to hope for and good companies will produce profits regardless of the theft by the market makers. The trick has always been to find them (and for those like me who are still slightly "chicken," act upon it).
From readings I have done, I would not be surprised if some of the market makers and their companies moved off shore, or south, so that enforcement becomes a legal entanglement that the SEC is not staffed or equipped to handle (the self regulation by the NASD appears to be a cruel joke). Given the technology and the inability of the SEC to take FIRM action there is nothing stopping them from adding this little "twist" to enforcement. Aircraft repair and maintenance centers have done it to avoid the costs of enforcement and surveillance by the FAA (amongst other reasons).
Bob, I hope that there are more out there like yourself who have a conscience and are willing to educate us. I will press on regardless of the jerks in the marketplace and share information that I come across that.
Earl |
