Last modified: 2009-08-24 11:31:12 by newbtrader

Last modified: 2009-08-24 11:35:29 by tsberts
Reason: I'm late, as usual

Darth Blankfein wrote..

We take seriously our roles as a liquidity provider and allocator of capital and the effect they have on the efficient functioning of markets...

http://www.scribd.com/doc/16498635/Blank....

Quote:

2. Between January 2000 and April 2001, defendant Lee manipulated the securities of six companies -- whose securities ordinarily traded on the National Association of Securities Dealers Automated Quotation System ("NASDAQ") -- by using multiple nominee accounts to engage in wash sales and other manipulative conduct.
(editor's note: essentially every HFT is a wash sale)

3. Lee executed wash sales -- the practice of simultaneously buying and selling an issuer's stock at the same price -- to create the impression of an active market in the six securities he manipulated. Lee typically engaged in a series of large volume wash sales at gradually increasing prices to create the appearance that the stock price was rising as a result of genuine market demand for the securities.
(editor's note: sounds exactly like what Goldman does)

4. To further enhance the appearance of an active market created by his wash sales, Lee also placed numerous unmatched buy and sell limit orders at prices substantially higher and lower than the prices at which his wash sales were executed. These "phantom" orders had little or no chance of ever being executed but were visible to the public as evidence of an active market.

5. After Lee succeeded in artificially inflating the price and volume of the securities he had targeted, he then realized profits by selling out his own position which he had previously acquired at a lower price.
(editor's note: Lee didn't have the ability to pump using buy "recommendations" either)

6. Lee engaged in his manipulative trading anonymously from his home computer using online brokerage accounts that enabled him to route his orders to an electronic communications network ("ECN"), an electronic system that collects buy and sell orders for securities and allows the orders to be executed against each other and generally displays unmatched orders.
(editor's note: ECNs and dark pools are the preferred venue for much of this activity and the direct attachment (even co-location) with the exchange network allows the ECN-style trading to overwhelm the public bid-offer.)

7. By knowingly or recklessly manipulating the securities of six issuers, defendant Lee, directly or indirectly, singly or in concert with others, violated, and, unless restrained and enjoined, will again violate, the antifraud provisions of the securities laws, specifically, Section 17(a) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. § 77q(a)] and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. § 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].