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Strategies & Market Trends : From the Trading Desk -- Ignore unavailable to you. Want to Upgrade?

To: steve goldman who wrote (2565)	2/10/1998 1:57:00 PM
From: edward shapiro	Read Replies (2) \| Respond to of 4969

Steve, Just the tip of the iceberg, but a nice example of what you are always talking about. How come the firms are always allowed to get away with - "Morgan Stanley, which neither admitted nor denied NASD Regulation's findings"- paying the fine and not admitting guilt? Is this to keep them away from the appearance of establishing a pattern of this behavior and make it seem like an isolated incident? Is it just standard NASD settlement language? BW1371 FEB 10,1998 9:46 PACIFIC 12:46 EASTERN ( BW)(NASD-REGULATION) NASD Regulation Fines Morgan Stanley $35,000 and Orders $80,000 in Restitution for Failure to Give Best Execution Business Editors WASHINGTON--(BUSINESS WIRE)--Feb. 10, 1998--NASD Regulation, Inc., today announced that Morgan Stanley & Co., Inc., has been fined $35,000 and will pay more than $80,000 in restitution after settling charges that the firm failed to provide three customers the best execution possible in the sale of common stock. The firm was also censured. Morgan Stanley, which neither admitted nor denied NASD Regulation's findings, will promptly repay the three investors restitution and interest. In its settlement with NASD Regulation, Morgan Stanley was also cited for violating the rules and regulations relating to trade reporting and record keeping in connection with these transactions. NASD Regulation began its investigation following the receipt of a customer complaint. The complaint, which was received shortly after the customer sold 14,000 shares of stock to Morgan Stanley on February 8, 1996, alleged that the firm failed to provide the customer with the best price possible for the stock. After further investigation, NASD Regulation discovered two additional investors who had sold a total of 15,600 shares to Morgan Stanley on the same day and failed to receive the best price possible. According to NASD Regulation's findings, all three customers placed their orders with Morgan Stanley prior to the market's opening on February 8, 1996. Had the three orders been executed promptly, the customers could have received a higher price for their shares than they did. Furthermore, Morgan Stanley failed to notify NASD Regulation's Automated Confirmation Transaction Service(SM) (ACT(SM)) within 90 seconds following the execution of the trades; failed to designate those trades as late once they were reported; and failed to include the time at which the executions occurred. In addition, NASD Regulation found that Morgan Stanley failed to properly maintain the order tickets for these three orders. Investors can obtain the disciplinary record of any NASD-registered broker or brokerage firm by calling (800) 289-9999, or by sending an e-mail through NASD Regulation's Web Site (www.nasdr.com). NASD Regulation oversees all U.S. stockbrokers and brokerage firms. NASD Regulation, and The Nasdaq Stock Market, Inc., are subsidiaries of the National Association of Securities Dealers, Inc. (NASD)(R), the largest securities-industry self-regulatory organization in the United States. For more information on NASD Regulation, visit the Web Site (www.nasdr.com). --30--rc/ny* CONTACT: NASD Regulation, Inc. Michael W. Robinson, 202/728-8304 Robinsom@nasd.com KEYWORD: DISTRICT OF COLUMBIA INDUSTRY KEYWORD: BANKING

To: steve goldman who wrote (2565)	2/10/1998 6:05:00 PM
From: tallguy1	Read Replies (2) \| Respond to of 4969

I've been reading this thread for quite some time and I apreciate much of what you and others post. I do happen to think you are undoubtably biased regarding market makers and so forth. Lets be honest with each other. You know as well as I do that the average small fry that trades 5-10 times per year is NOT getting royally hosed on many of his trades. Particularly if one is half-way knowledglable about trading, the NASDAQ limit order protection rule and so forth. If a stock is $50-50.25 and joe six pack pays the ask for his 100 shares throgh Datek or Suretrade or some other $10 broker he is not getting royally screwed. In fact, he's coming out AHEAD of where he would at good-ole Yamner. Lets assume you can in 1 of 6 cases (as you stated) get price improvement--(I get that in perhaps 1 in 4 without an account at Yamner). So you save Mr. Sixpack an eighth and charge him $35 whereas Datek charges $10 +12.50 (lack of improvement) so in this case Datek beats Yamner by a whopping percentage. Sure, many times Joe Six pack is buying more than 100 shares. Where is your advantage as opposed to him placing a limit order at or slightly above the bid with the largest market maker in the country ? Sure, in one of 6 cases perhaps you'd save them a 32nd. To me on an average trade of 1000 shares, even a 1/16 improvement equals about $10 per trade. The average Joe would still be better off with a deep discounter. What about the guy that buys 10,000 shares ???? Well, in that instance you'd do MUCH better for him if you were indeed a market maker while still retaining some of your often-expressed ethics. Whats the deal Steve ?? Does one automatically give up any sense of morality or right/wrong as soon as he gets on the block ?? (g) I'm sorry, for the average Joe Six Pack, assuming he's qualified to make his own investment decisions (If he isnt, he doesnt need Yamner!) he'd be better off utilizing a quality discounter that goes through MASH or HRZG and paying $12-19 per trade. Yes Mr Goldman, sophisticated investors can know and understand payment for order flow and STILL make a case for using a deep-discounter. The fact that you dont follow them (wont look into them) doesnt excuse your blanket dismissing them for the educated investor that doesnt need hand-holding. Payment for order flow is standard practice in the brokerage industry . The smart investor uses that to his advantage. I promise you Mr Goldman, just because my discounter pays 2 cents a share for my order flow, he does NOT take me to the cleaners for 23 cents a share. Overall, he probably AVERAGES about a penny a share on me though he pays 2 cents. Sure, some poor shmuck picks up my slack but I cant and wont trade worrying about all the retail fools out there.I can live wIth a market maker paying 2 cents to my discounter for my business considering the advantages he offers me. You know...the ones you conviently ignore ?? (g) Thanks again for all your advice and wisdom...if you could just get past your own self-interest and tell it like it REALLY is, you'd be so much more valuable here.