Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Final Frontier - Online Remote Trading -- Ignore unavailable to you. Want to Upgrade?

To: Wayners who wrote (8789)	3/3/2001 4:47:56 PM
From: LPS5	Read Replies (1) \| Respond to of 12617

Hi Wayne, Currently, "parking" is almost impossible to track in real-time, so is almost always caught after the fact.* The practice contemplated by parking, as I'm sure you know, runs along two lines. The first implies an individual seeking to skirt (for example) the position limits of options, etc., such as we discussed earlier, thereby using other individuals', firms', etc. accounts to do so; in so doing, they're seeking to misrepresent the actually associated nature of those accounts as being disassociated with the trading activity. The second contemplates a similar violation in which a promoter or underwriter, typically trying to build up a controlling position in a stock, purchases the stock and stuffs it in other individuals' accounts, often without their knowledge. The first type is extremely hard to catch because the way that it would be done is to have the other individuals purchase the stock on behalf of the individual desiring control, which to a large extent puts him or her at the risk of his or her agents. By that I mean, if person A is trying to build up a position in stock ABC options, and gets persons B, C...Z to purchase positions, he's got to either be offering them something or represent some outcome which is far from certain and likely to fall apart. Overwhelmingly, the way these (and other) attempts at quasi-cartel manipulation fall apart and are discovered have to do with one party to the manipulative effort becoming disenchanted and going to the authorities. As for the other form, where brokers put stock in the accounts of unwitting customers, etc., while still after the fact, the paper trail is ridiculously simple to follow when the SRO (NYSE or NASD) and/or SEC conduct an audit. The clearing firm would have cancel/rebill tickets for the journaling of the trades between accounts, plus there'd often be no order tickets for the transactions, almost assuredly customer complaints somewhere along the line, and there'd be confirms sent by the clearing firm reflecting trades for which there were no order tickets, etc. In the former case, when individuals act in concert, it takes longer to discover the collusive action behind the parking scheme, but the truth always comes out in the end. In the latter case, it's very, very easy to see what was going on. In both cases, the activity is clearly manipulative and subject to both regulatory, civil, and criminal action. With regard to the specific controls that are in place, I'd characterize them as the paperwork maintenance requirements, the supervisory chain requirements, the training that reps are required to have, and - coming soon - the OATS. *The OATS (Order Audit Trail System) will track transactions via electronic "tagging" from cradle-to-grave (order routing through execution, locking-in, reconcilliation, clearance and final settlement), making the discovery of this and other types of activity very easy to spot in a short amount of time. LPS5

To: Wayners who wrote (8789)	4/5/2001 12:09:05 PM
From: LPS5	Read Replies (1) \| Respond to of 12617

Message 15619182 Wayne, Do you think that with retail investors only now, in the wake of a massive NASDAQ decline, questioning (perhaps only now considering) the conflicts inherent in listening to analysts, that buyside institutions would be on the same timetable with them? Or that buysiders have, with the exception of hedge funds, adopted any sort of "momentum" trading practices? You are aware that very few buyside organizations actually execute their own trades, aren't you? LPS5