Here is some information i came across relating the details of some Specialist and MM manipulations:
LEAP FROG
On Monday September 23, 1996 AT&T closed at 57.12. On Tuesday morning (24th) the Specialist opened the stock at 53. It then slid to 51.5 by the end of the day. This is Specialist manipulation in its rawest form. THE STOCK OPENED DOWN OVER FOUR POINTS. Think about that. What if you were the head of a mutual fund and your trading computer was going to sell AT&T at 54, or 55, or 56? What happened to the hapless fund managers, or to the millions of individual investors holding
AT&T stock? I should think they all felt like they had been violated.
On Thursday, January 23, 1997 Cascade Communications closed at 64.125. After the close, the results of Cascade's Fourth Quarter Earnings Report were released. On the morning of Friday, January 24, 1997 the specialist in Cascade opened trading at 45.25, down 18.875 points. Cascade closed at 41. But before one investor got to place a sell order, the specialist had taken 29% from him. The Earnings reported were good, and better than expected. But supposedly, they showed 'weakness' toward future earnings. What really happened was that Cascade fell victim to the first bear raid of this slide. It was wonderfully well organized. Nasdaq said that Cascade's volume of 43.7 million shares was the ninth - largest single - day volume in the history of the market.
On Thursday, January 30, 1997 Radisys announced that its 4th Q net income was up some 475%. RSYS closed at 58. After the close rumors spread that in a wrongful termination suit, the plaintiff had accused RSYS of 'financial discreprenies'. The specialist in RSYS opened the stock down 10 points Friday, and it slid to 46 at the close. Good report followed by a Bear Raid; does it sound at all familiar?
SUMMARY
The SEC will not allow us little guys to do what the Specialists do without a second thought. That is the way it is. That is how the game is played. I just thought you should be aware of the abuses. I will try to post more in the
future.
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