Posts Tagged ‘Bernard Madoff’

FINRA Story

Larry Doyle’s been reporting on the Financial Industry Regulatory Authority (FINRA) for over a year. His efforts are beginning to pay off. Recently, investigators from the government watchdog unit, the Project on Government Oversight, referenced Larry’s work in a letter sent to banking, finance, and oversight sub-committees up on the Hill regarding FINRA. Here’s three important posts by Larry that help tell the FINRA story. – Ilene 

Barron’s Highlights FINRA’s Stench 

Obama Appoints Three Financial Regulators in Chicago

Courtesy of Larry Doyle at Sense on Cents, posted on March 6, 2010 

The stench surrounding FINRA is attracting real attention.

The executives of Wall Street’s self-regulatory organization FINRA should not think that the recent dismissal of one legal complaint is reason for celebration. Why? Those who care for transparency measure success not in terms of judicial victories but to a much greater extent by public pressure and awareness. On that note, at long last real progress in creating transparency into FINRA is occurring.

From the highly regarded government watchdog Project on Government Oversight to now the leading weekend business periodical Barron’s, FINRA’s stench is attracting attention from more than the blogosphere and a few selected journalists (Bloomberg’s Susan Antilla, The Washington Examiner’s and Baltimore Sun’sMarta Mossburg, and also Barron’s Jim McTague).

The news in an article this weekend by Barron’s is not news to regular readers of Sense on Cents, but to most of America FINRA remains a foreign entity. Those days are changing. 

Barron’s excoriates Wall Street’s self-regulator today in writing, FINRA, First Heal Thyself:

IN 2007-08, regulators at FINRA were so distracted with empire-building and lining their pockets, they overlooked the world’s two largest Ponzi schemers: Bernie Madoff and, allegedly, R. Allen Stanford. So what’s the deeply flawed Financial Industry Regulatory Authority up to now? Building itself an even bigger empire.

The quasigovernmental body, which advertises itself as the white knight of 90 million investors, is lobbying Congress for the power to regulate 11,000 investment advisors who now fall under the jurisdiction of the Securities and Exchange Commission and state securities regulators. The states regulate those with less than $25 million in assets, but want Congress to bump that to $100 million. Why? The SEC does such a poor job, it visits an average of one advisor every nine to 11 years!

Finra currently regulates Nasdaq and New York Stock Exchange brokers and securities dealers, and pays its executive staff high-on-the-hog salaries, despite abysmal performances. This is the same behavior that contributed to the failure


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Madoff’s Other Legacy

Madoff’s Other Legacy

By Justin Fox, courtesy of TIME

courtesy of TIME

One day in fall 2007, I found myself on the 19th floor of the Manhattan skyscraper known as the Lipstick Building, listening to Bernie Madoff explain to me how he made money. This was in preparation for a discussion called the Future of the Stock Market that I was moderating; Madoff was a participant. (It’s a big hit on YouTube — just Google "Madoff video.") Sadly, he didn’t happen to mention the now infamous Ponzi scheme he was running two floors below us. At issue was his legit business, a brokerage that had long been one of the biggest marketmakers (the firms responsible for keeping trading going) on the Nasdaq exchange.

"You’ve heard of payment for order flow, right?" Madoff asked. "Huh?" I responded. Madoff explained that Bernard L. Madoff Investment Securities had pioneered the practice of paying customers to trade through it, thereby siphoning business away from the New York Stock Exchange (NYSE). The firm was able to use its sophisticated computer systems and trading algorithms to earn enough off the spreads between what it bought and sold stocks for to more than offset the amount it paid customers.

This was my first glimpse into the strange modern methods of making money from making markets in stocks. Madoff’s version of it was actually outdated by the time he explained it to me. With the government-ordered advent of decimalization in 2000 (stocks were previously traded in eighths of a dollar) and the rise of nimble competitors, the big spreads that Madoff Securities once feasted on were already a thing of the past.

Bernie MadoffSince 2007, the evolution has accelerated. Less than a third of the trading in NYSE-listed stocks is now done through the NYSE — and only a tiny fraction of that by the floor traders, who now function mainly as a colorful backdrop for CNBC broadcasts. Virtually all stock-trading is electronic, and somewhere from 45% to 70% of trading volume is done by high-frequency traders who make their money by the millisecond.

In the past few weeks, all this has become controversial. Flash orders — a feature offered by some exchanges that allows high-volume traders the advantage of posting orders for up to half a second and then removing them — have drawn the ire of the authorities. Related revelations about the high-speed, almost fully computerized…
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Zero Hedge

A $30 Billion Computer Is About To Start Selling Stocks

Courtesy of ZeroHedge. View original post here.

One by one, human traders - having suffered devastating losses in the past 11 months - are giving up hope on stocks, now that BTFD no longer works. And, in a disturbing development, so are the robots.

A $30 billion computer, run by UBS' wealth management which oversees $2.4 trillion in capital and entrusted by some of the world’s richest, is poised to underweight stocks as real money and systematic investors pare risk amid flagging bull-market momentum. According to Andreas Koester, head of global asset allocat...



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Phil's Favorites

The US government has huge debts, and House Democrats could lead the way on solutions - an economist explains how

 

The US government has huge debts, and House Democrats could lead the way on solutions – an economist explains how

Democrat Nancy Pelosi spoke in D.C. the night of the midterm elections. Reuters/Jonathan Ernst

Courtesy of Laurence J. Kotlikoff, Boston University

Now that Democrats control the House, the question on many minds is what they will do with it.

Incoming Majority Leader Nancy Pelosi s...



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Kimble Charting Solutions

Stock Market Correction Lingers As 800 Pound Resistance Levels Hold

Courtesy of Chris Kimble.

Key stock market indices continue to struggle beneath 800-pound Fibonacci extension levels (resistance).

In today’s “6-pack” chart, we illustrate these key bull/bear lines for investors – see below. The Dow Jones Industrials, Transports, S&P 500, and Nasdaq 100 are all experiencing weakness and selling pressure at long-term Fibonacci extension levels each at (1).

But the overhead resistance spreads to other key sectors like the Banks and Semiconductors. The Banks are experiencing weakness at the 2007 highs at (2) and the Semiconductors are experiencing weakness at the 2000 highs at (3).

Expect market weakness (or consolidation) to continue until these stock indexes and key market sectors breakout above resistance. Stay tuned!

6-Pack of Stock Market Indices –...



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Insider Scoop

BTIG Research: Etsy Is Online Leader In Handmade, Artisanal Goods

Courtesy of Benzinga.

Related ETSY Is Etsy A Better E-Commerce Play Than Amazon? 88 Biggest Movers From Yesterday ...

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Members' Corner

NY Times: OPERATION INFEKTION

 

This is a three-part Opinion Video Series from NY Times about Russia’s meddling in the United States’ elections as part of its "decades-long campaign to tear the West apart." This is not fake news. Read more about the series here.

OPERATION INFEKTION

RUSSIAN DISINFORMATION: FROM COLD WAR TO KANYE

By Adam B. Ellick and Adam Westbrook

EPISODE 1

MEE...



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Chart School

Weekly Market Recap Nov 11, 2018

Courtesy of Blain.

This past week was saw another positive move up by bulls – especially in the Dow and S&P 500; the NASDAQ was not quite as enthusiastic.   Wednesday’s rally was on the legs of an election that was seen as market friendly or at least not as bad as it could have been.   Essentially – paying people a lot of money to get nothing done the next 2 years – woo hoo!

The market is interpreting Wedneday’s result as insuring that “no big things will get done,” in Washington between now and 2020, Craig Birk, chief investment officer at Personal Capital told MarketWatch. “The market appreciates the relative certainty of the slow legislative agenda.” he said.

“As President Trump plans his 2020 reelection campaign, a gridlocked Congress is unlik...



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Digital Currencies

Bitcoin's high energy consumption is a concern - but it may be a price worth paying

 

Bitcoin's high energy consumption is a concern – but it may be a price worth paying

Shutterstock

Courtesy of Steven Huckle, University of Sussex

Bitcoin recently turned ten years old. In that time, it has proved revolutionary because it ignores the need for modern money’s institutions to verify payments. Instead, Bitcoin relies on cryptographic techniques to prove identity and authenticity.

However, the price to pay for all of this innovation is a high carbon footprint, created by Bitc...



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ValueWalk

Vilas Fund Up 55% In Q3; 3Q18 Letter: A Bull Market In Bearish Forecasts

By Jacob Wolinsky. Originally published at ValueWalk.

The Vilas Fund, LP letter for the third quarter ended September 30, 2018; titled, “A Bull Market in Bearish Forecasts.”

Ever since the financial crisis, there has been a huge fascination with predictions of the next “big crash” right around the next corner. Whether it is Greece, Italy, Chinese debt, the “overvalued” stock market, the Shiller Ratio, Puerto Rico, underfunded pensions in Illinois and New Jersey, the Fed (both for QE a few years ago and now for removing QE), rising interest rates, Federal budget deficits, peaking profit margins, etc...



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Biotech

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

 

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Breast cancer type 1 (BRCA1) is a human tumor suppressor gene, found in all humans. Its protein, also called by the synonym BRCA1, is responsible for repairing DNA. ibreakstock/Shutterstock.com

By Jay Shendure, University of Washington; Greg Findlay, ...



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Mapping The Market

Mistakes were Made. (And, Yes, by Me.)

Via Jean-Luc:

Famed investor reflecting on his mistakes:

Mistakes were Made. (And, Yes, by Me.)

One that stands out for me:

Instead of focusing on how value factors in general did in identifying attractive stocks, I rushed to proclaim price-to-sales the winner. That was, until it wasn’t. I guess there’s a reason for the proclamation “The king is dead, long live the king” when a monarchy changes hands. As we continued to update the book, price-to-sales was no longer the “best” single value factor, replaced by others, depending upon the time frames examined. I had also become a lot more sophisticated in my analysis—thanks to criticism of my earlier work—and realized that everything, including factors, moves in and out of favor, depending upon the market environment. I also realized...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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