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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Phil's Favorites

Brexit: An 'escape room' with no escape

 

Brexit: An ‘escape room’ with no escape

Courtesy of Terrence Guay, Pennsylvania State University

Brexit is beginning to look a lot like an “escape room” with no exit.

An escape room is an increasingly popular adventure game that requires participants to solve a series of puzzles before they can leave the room and advance into another one with additional riddles.

Brexit now seems to be a riddle that can’t be solved, after U.K. lawmakers voted down Prime Minister Theresa May’...



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Zero Hedge

Is This The Real Reason Why Stocks Are Surging?

Courtesy of Zero Hedge

Wondering why US equity markets are soaring at a pace not seen since the March 2009 lows? Confused by the massive swings higher despite weak macro data, and tumbling earnings expectations?

Well, the answer is simple once again, "it's not the economy, it's the central banks, stupid!"

Q4 2018 saw global stock markets finally wake up to the fact that the world's central banks were withdrawing liquidity and played catch-down to an ugly tightening reality. December's contagion to American stocks was the final straw for the world's elites however  and after the Mnuchin Massacre, it appears the Plunge Protection was ordered back into battle...



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Kimble Charting Solutions

The "Average Stock" is Facing a Big Test Here!

Courtesy of Chris Kimble.

The Value Line Geometric Index tends to give investors a good idea of the health of the overall market. It is an equal-weighted index with a broad swath of stocks that gives investors an idea of how the “average stock” is performing.

The Value Line Geometric formed highs in the same area in 1998, 2007, and 2015 (see blue line). In the last two years, the index broke out above that line and held above it until the recent correction.

It is now testing the underside of that price area (now resistance). Bulls will get good news with a breakout ABOVE thi...



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Digital Currencies

Crypto-Bubble: Will Bitcoin Bottom In February Or Has It Already?

Courtesy of Michelle Jones via ValueWalk.com

The new year has been relatively good for the price of bitcoin after a spectacular collapse of the cryptocurrency bubble in 2018. It’s up notably since the middle of December and traded around the psychological level of $4,000... so is this a sign that the crypto market is about to recover?

Of course, it depends on who you ask, but one analyst discovered a pattern which might point to a bottom next month.

A year after the cryptocurrency bubble popped

CCN...



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ValueWalk

D.E. Shaw Investment Calls For Leadership Change At EQT

By ActivistInsight. Originally published at ValueWalk.

Elliott Management has offered to acquire QEP Resources for approximately $2.1 billion, contending the oil and gas explorer’s turnaround efforts have done little to lift the company’s share price. The company responded and said that a thorough review of the proposition is imperative in order to properly act in the best interests of shareholders, “taking into account the company’s other alternatives and current market conditions.” The news came only a month after Travelport Worldwide agreed to sell itself to Siris Capital Group and Elliott’s private equity arm Evergreen Coast Capital for $4.4 billion in cash and two months after Athenahealth was bought by Veritas and Evergreen for $5.7 bi...



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Insider Scoop

UBS Says Disney's Streaming Ambition Gives It A 'New Hope'

Courtesy of Benzinga.

Related DIS Despite Some Risks, Analysts Still Expecting Double Digit Growth From Communications Services In Q4 ...

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Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's failure based on his personality, which was evident years ago. This article, written in 2017, references a prescient article Bill wrote before Trump became president, in July, 2016, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

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

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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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"

 

 

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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.

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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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About Ilene:

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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