Readers may have noticed my relative absence of late.
I assure you that the mission of DeepCapture is often front-of-mind, but to pay the hosting fees and other expenses of our investigative journalism I maintain a day job, and some periods are busier than others. Also, I have been comfortable watching events take their natural and overdue course.
However, the time of year has arrived when things slow down a bit for me. I have been going through my files, and given events of the last two years they present such a target-rich environment it is hard to know where to start.
So let us begin by revisiting an oldie-but-goodie.
I think the image was a particularly concise way to express the dynamic I was trying to get across to the public. Sometimes folks challenge me on my language, which is at times, admittedly, earthy. De gustibus non disputatum est, and all that. My response is simple: once I understood what I was up against I decided to punch through the distortion by adopting imagery and metaphors that I knew they could not resist quoting. (Also, I suppose it represents a certain form of intellectual snobbery: I’ll debate the Chief Economist of the SEC on equal terms, but when having to deal with the riff-raff I cannot resist slipping into a Hunter S. Thompson frame of mind. It’s a failing, I’m sure.) On the other hand, one may ask, Why did Bethany give this the special fly-out? I think it was a writer’s professional jealousy: judging from All the Devils are Here, Bethany McLean and Joe Nocera couldn’t turn an interesting phrase if it had a handle bolted to it.
Given the events of the interceding five years, I only wish Bethany had not buried the lead.
Always nice to hear from you, Patrick. And to hear from Mark Mitchell recently regarding his on-going work. I’m encouraged to hear in your interviews and read your optimistic outlook about prospects for real progress on financial fraud. As I wrote earlier this week, the outlook of the DC team deserves considerable weight in estimating whether this latest round of subpoenas is the real thing or more tree-shaking for political campaign fund-raising. Here’s to real progress in 2011. Merry Christmas!
Patrick, Do you think Ron Paul overseeing the Fed. will make a difference or is it just more controlled opposition? The Fed is effectively in charge of Wallstreet, including the DTC.
Nothing as fun as price fixing an auction market.
http://www.nytimes.com/2010/12/12/business/12advantage.html?_r=2
…Securities experts say prosecutors and regulators often look for patterns of behavior in which traders and analysts know each other and also trade in similar stocks….
above quote from Boston Emerges as a Major Hub in Insider Probe
By Matthew Goldstein and Svea Herbst-Bayliss December 10, 2010
http://uk.reuters.com/article/idUKN0926011720101210
Thank you for all you have done and continue to do, Patrick. Victory is sweet, even when it is “…a long, slow thing.”
ask for margaret.
(score one for the good guys)
Canada watchdog rejects Alpha “internalization” bid
5 minutes ago by Thomson Reuters
*OSC raises concerns about internalization
*Move by regulator seen as bold
By Jennifer Kwan
TORONTO, Dec 15 (Reuters) – Canada’s major securities watchdog has rejected a plan by the country’s biggest alternative trading system, Alpha ATS, to launch a “dark liquidity” facility that would allow dealers to match trades within their own walls.
In a notice published on Tuesday, the Ontario Securities Commission said Alpha’s so-called IntraSpread facility, as originally proposed, is inconsistent with trading rules that ensure fair access for market players.
At the heart of Alpha’s proposal was a bid to launch a type of stock trading order that would effectively allow dealers within the same firm to match orders, a process referred to in industry as internalization.
Alison Crosthwait, director of global trading strategy at electronic trading firm Instinet, described the OSC’s move as “bold”.
“The regulators are coming down and saying we do not want internalization to happen on public exchanges,” she said.
“What they don’t like about that is nobody else has the opportunity to trade with that order and nobody else gets the information that order exists because they can’t see it.”
The Alpha plan would have effectively created a pool of dark liquidity. Dark pools are mostly anonymous, off-exchange stock trading venues where traders can match orders while concealing price and volume. By allowing traders to hide their cards, dark pools limit the impact of the order on stock prices before it is complete, reducing costs for the trader.
Critics charge the lack of visibility impedes price discovery, which lets the market know what demand and supply is available when making stock-buying decisions.
The proposal could have given Alpha, whose rivals include TMX Group , Chi-X Canada and Pure Trading, an advantage given that its key owners are the investment dealer arms of the country’s largest banks, which direct much of the stock trading flow in Canada.
Alpha has amended and resubmitted its proposal to regulators for public comment, effectively omitting the internalization component, said Jos Schmitt, the company’s chief executive.
Schmitt said the OSC’s decision is not a major setback, but that he is disappointed the process has been delayed. He had initially expected to launch the facility in the fourth quarter.
“I’m a little bit disappointed because we’re losing time and it is something that can be extremely beneficial to the industry. It is what it is,” he said.
Schmitt said he doesn’t believe the debate about internalization is over in Canada.
“All they have said at this stage is that they don’t want marketplaces to provide that type of service. But I think the entire topic of internalization is still ahead of us,” he said.
The OSC said it has also spoken with Match Now, a dark pool operated by TriAct Canada Marketplace that is offering a similar internalized order type. The regulator said it wants trading of such orders by TriAct to end by Feb. 1, 2011. (Reporting by Jennifer Kwan; editing by Peter Galloway)
I have been investing and working in the business for 12 years and have been blind to this issue. Recently, I have noticed some very suspicious activity in my largest holding. I guess my question is how do you put an end to this…is there a way to get these dirtbags out of a stock. They have clearly been doing everything in their power to close the stocks on its lows everyday. There are only 10.6 million shares outstanding and I can account for a pretty signicant percentage of the shares through conversations with other large owners….yet the stock has traded 5.3mln shares in 6 weeks and anytime the stock starts to go higher, it gets attacked at the end of the day. The registered short position is only 170,000 shares and the stock is 5.55…it doesn’t make sense for anyone to work so hard to keep the stock down with for such little profit. It seems like several funds are working together.
Is there anyway to get them out of the stock…what is the best way to register a complaint with the SEC if the activity continues?
You seem as well versed as anyone I have seen on the topic. I have a lot of my money in the stock and many who rely on me for advice on the stock as well. The company has $25mln is cash so is in no near term risk of being destroyed, but the activity I am seeing scares me. ANy help or insight you have I would greatly appreciate.
Although I have not been able to post messages to Deep Capture web site for months, I read this site daily and respect its modis operandi!!!
Marv Eatinger
If you post more than a few links or certain words or too often, the blog software causes the post to not appear.
Racketeering, ya gotta like it.
http://www.bloomberg.com/news/2010-12-17/overstock-adds-rico-claim-to-short-sale-suit.html
Go Patrick!
Concerned
I am afraid you can’t look to the SEC. They just don’t want to make an issue of this. They don’t have the tools or desire to enforce the rules on short selling, or to even collect the appropriate data.