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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: maverick61 who wrote (33016)	8/27/2000 12:41:23 AM
From: Sharck	Read Replies (2) \| Respond to of 57584

Hey Rande, Finally made it to SI, Subject 36700, hope to make some contributions here, there and everywhere.... Lata... Sharck

To: maverick61 who wrote (33016)	8/27/2000 5:37:38 PM
From: Mark Konrad	Read Replies (4) \| Respond to of 57584

Maverick, you make the classic Laissez-Faire/Caveat Emptor/Libertarian arguments with rational eloquence. Academically, I'm inclined to agree with each of your points. But with all respect, here's why I believe the NASD should cancel/reverse all of Friday's EMLX trades: Although the U.S. equity markets primarily serve private investors and institutions, they do hold a public trust and serve millions of passive investors through pensions and retirement funds. Therefore, the officials have a fiduciary responsibility to preserve that trust and make judgment calls (like referees) when necessary. I believe they acted correctly (though late) in halting trading in EMLX. But by simply reopening trading nearly THREE HOURS LATER with no remedies in place, considerable damage to small investors and public confidence was actually worsened. Better if trading had not been halted at all; traders and investors would have had a shot at buying back shares in a more smooth and orderly fashion. Instead, we've got weekend headlines in every major newspaper with horror stories galore. Let's assume that this hoax was financially motivated by one or more individuals. Let's also assume that at least one or more of the conspirators couldn't keep a secret and informed at least one or more individuals who, in turn, did the same. These "insiders" could be anywhere from LA to NY to the "far flung Isles of Langerham" and there is no chance their participation will be proved. I know this, you know this, everyone knows this; our confidence in the system and the referees who could have said, "play the down over" is weakened. Already jittery financial markets become even more fragile. Is this good for anybody but market makers and the most aggressive stock market professionals? No. And again, everyone knows this. It's completely a judgment call but I think reversing/cancelling ALL of Friday's EMLX trades would set a good precedent. It would say, in effect, that this was a gross violation of "fair play," that no one should profit or lose based solely upon a well-executed hoax or act of financial terrorism. It would guarantee that conspirators who can't be caught would at least not profit. It would help remove the motive for a repeat performance down the road. It would help bolster public confidence in the integrity of our laws and officials. In general, I deplore most forms of government intervention and I also believe that traders and investors are responsible for their own actions (win or lose). If Agilent or Lucent warn of lower earnings and I lose money (as they have and I have), I can use our system of laws to go after the company and its officers for fraud (if I want to) with the knowledge that there is some measure of accountability. There is essentially no recourse with the EMLX hoaxster(s). Yes, it's a judgment call. Where do you draw the line? To a certain extent, hoaxes, rumors, pump-and-dumps, etc., happen every day. Does everybody get their money back every time someone cries "foul?" No. But the time is ripe, right now, for a "singular" attempt at using the "wisdom of Solomon" in my opinion. This type of event on this large a scale does NOT happen every day (EMLX is not a penny stock and the NASDAQ is not the VSE, thank God!). And since we cannot accurately measure or address the ripple effect to other stocks like QLGC, let's ignore those and admit that we can only do so much. And to those legitimate investors and traders who shorted on the way down or went long near the lows I'd simply say, "sorry...you're no better or worse off than you were yesterday...the entire play was corrupted from the outside...we're playing the down over." NASDAQ, please take an unprecedented bold stand now to help ensure we won't have to do it in the future, perhaps on an even grander scale (has anyone else read Clancey's "Debt of Honor?"). Do it now when only millions of dollars are at stake, not billions or trillions. Strike now while the iron is hot and maximum gain can be had for minimal pain. For the sake of the honest, hardworking, individual investors and retirees, for the sake of the integrity of the U.S. equity markets and our national reputation for equal opportunity and fair play, PLAY THE DOWN OVER. All in my honest and sincere opinion, Mark Konrad P.S. I did not gain or lose money on EMLX Friday and currently have no position in EMLX.