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.

Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Giordano Bruno who wrote (23639)	10/29/1998 8:29:00 AM
From: MrLuckyman	Read Replies (1) \| Respond to of 164684

Richard Ney and the Wall Street Gang 2 Replies. Back to #236 Subject: Richard Ney and the Wall Street Gang To: BenYeung From: Peter Quon Apr 14 1998 7:33PM EST Reply #237 of 416 NASD Fines Morgan Stanley $1 Million For Allegedly Manipulating Stock Prices (Ben, thought of you when I read this article. Hope you enjoy it. Peter) By DEBORAH LOHSE April 14, 1998 Staff Reporter of THE WALL STREET JOURNAL The National Association of Securities Dealers fined Morgan Stanley & Co. $1 million and suspended and fined seven traders for allegedly manipulating in 1995 the price of 10 stocks that are part of the Nasdaq 100 Index. The decision was issued Monday, following five days of hearings last June and July before the NASD's market-regulation committee. That committee, made up of members of the securities industry, was convened after Morgan Stanley contested an NASD Regulation complaint on the matter issued Oct. 25, 1996. In addition to fining Morgan Stanley $1 million, the NASD suspended from the securities industry for 90 days and fined $100,000 the firm's former head Nasdaq trader, David Slaine. He has since left the firm for a hedge fund. Six other traders -- Thomas Anthony Crocamo, Carl DeFelice, Joseph Louis Ferrarese, Peter William Ferriso Jr., Robert Scott Ranzman, and Charles McMichael Simonds -- were each suspended for 30 days and fined $25,000. All the men except Mr. DeFelice couldn't be reached for comment; Mr. DeFelice said he had no comment. The decision alleges that Morgan Stanley artificially raised the price of stocks it was selling to its own program-trading department on two Fridays in 1995 when options in the Nasdaq 100 Index expired. (Such options are tradeable instrumemts that mirror the value of the stocks making up the index.) Trading Desk's Actions The allegation stems from actions taken by Morgan Stanley's Nasdaq trading desk designed to help the firm's program-trading group. That group had hedged positions for the firm and customers by selling "short" shares of stocks that it didn't actually own, and had to buy shares on the day certain options expired. To do so, they bought the shares from their Nasdaq trading desk, which didn't own the shares, either, creating a new "short" position. To make sure that new, short position didn't suffer any losses, NASD alleges, the traders sold the program-trading group shares at prices that were propped up before the market opened. The Nasdaq traders then bought back the shares on the open market once the prices fell back down, the NASD alleges. Morgan Stanley, now known as Morgan Stanley Dean Witter & Co., "strongly disagrees with NASDR's conclusions," according to a spokeswoman, and plans to appeal the decision to the NASD's National Adjudicatory Council. The decision is stayed until the appeals process is through. The NASD alleges that Morgan Stanley propped up the prices by "locking or crossing" the market before stocks officially started trading -- driving higher the price the traders would ultimately pay its program-trading group once trading started. Locking or crossing occurs when the buying price for a stock becomes equal to or greater than the prevailing selling price, which is normally slightly higher than the "bid" price. Locking or crossing the market isn't allowed unless the trader makes an attempt to trade with the person whose posted price they are locking or crossing. Morgan Stanley argued to the NASD that its traders did make such attempts, but the NASD contended there wasn't any evidence that was true. Complaints about locked and crossed markets by Morgan Stanley traders sparked NASD's investigation of the firm, according to officials there. Risk Put at $300 Million The committee alleged that Morgan Stanley's over-the-counter desk assumed the risk for more than $300 million of the firm's capital as a result of the intra-firm transaction, thereby enabling the program trading desk to cover its short position at a price (in this case, the opening print price) that would prevent substantial losses, and enable the over-the-counter desk later to cover the short position at a profit, or at least to break even. People close to Morgan Stanley say the firm will argue on appeal that Morgan Stanley wasn't acting manipulatively, but was simply looking to attract sellers when it raised its stock prices to cover its short position. The firm claims it couldn't know for sure the stock price would drop later. Such complaints also have caused the NASD to look into whether other firms are improperly handling opening price-setting, say people close to the NASD. However, the Morgan Stanley alleged behavior would be very hard to repeat because the way the index value is set has changed. Subject: Richard Ney and the Wall Street Gang To: BenYeung From: R. Bond May 8 1998 2:27PM EST Reply #250 of 416 Ben, Just to let you know that since I first posted here in March, I've read Mr. Ney's 3 books (unless there are some others I'm unaware of). Fantastic!!! I am doing a lot of work using his charting methods and slowly, steadily approaching the understanding of it that I can feel lurking in my intuition. Thanks, again, to the thread for being here. And thanks ever so much for the great link to finding the books.