10 ms·

It's crazy that this kind of thing is tolerated in financial markets. It should be criminal to manipulate markets like this. Time and again I'm convinced that

It's crazy that this kind of thing is tolerated in financial markets. It should be criminal to manipulate markets like this. Time and again I'm convinced that it is extremely difficult to succeed as a retail trader. The odds of you succeeding given false signals like this are just depressingly low. And this is just one instance where the prosecution was able to prove wrongdoing.

missedthecue 6y ago
It's not tolerated? They're paying a billion dollars in fines for doing it.
- jjoonathan 6y ago
  How much did they make from it?
- hu3 6y ago
  If companies can get away with repeatedly breaking the rules then it is not forbidden. Just taxed in the form of fines.
- moneytide1 6y ago
  "The accord would end probes by the Justice Department, the Commodity Futures Trading Commission and the Securities and Exchange Commission into whether traders on JPMorgan’s precious metals and treasuries desks rigged markets, two of the people said." So $1B paid will stop further investigations? Meaning it can continue to manipulate and the fee is just the cost of doing business?
  - mlindner 6y ago
    No? The fine is there to prevent them doing it further. They'll start investigations again if they see more of such activity.
- ponker 6y ago
  You use italics for the word “billion” but JPMorgan doesn’t.
- ddoran 6y ago
  The shareholders of JP Morgan are paying the fine. Not the bad actors behind the market abuse.
  - vkou 6y ago
    The shareholders are part of the bad actor, because the shareholders control the board, and it's the board's job to police the company, and to make sure that it's actually ran well, and isn't just a free-for-all frat party. If the shareholders cared to avoid these sorts of judgements, they'd require that the firm operate more conservatively.
  - hogFeast 6y ago
    The guy involved has left JPM, most of his team will have left too, they will have bonus payments clawed back, they will be banned from the industry, and are being charged criminally. Afaik, two people from this team are currently in prison.
    - deleted 6y ago
      [deleted]
- chabes 6y ago
  If they are making more than a billion from manipulating the markets, the billion dollar fine is part of the business plan.
  - hogFeast 6y ago
    They didn't. The size of the fine is unrelated to the profit (at the very least, the fine is 10x the profit).
    - thrownaway954 6y ago
      that's what they are claiming. i'm sure they are not reporting everything they made. companies who do these sorts of manipulations know what they are doing and hide as much as they can.
- klyrs 6y ago
  But where's the law and order? Do the executives and traders get tackled, beaten, strangled and shot a dozen times in the back? Nope. Their employer gets fined and they keep their paychecks and bonuses.
  - NovemberWhiskey 6y ago
    Did you read the bit in the article where the former head trader of the precious metals desk is being prosecuted for RICO violations? Along with several other traders from the desk?
- okprod 6y ago
  JPM probably made a lot more than that fine. First week orientation in my friend's MBA program before classes started was a session about ethics. He thought it would be about being ethical, but the professor said as businesses for any risky decision they should weigh potential profit versus penalty/punishment, because if it makes financial sense to pursue something, even an unethical endeavor, any penalties/fines are justified.
  - SpeckOfDust 6y ago
    If that's true it's so messed up.
nradov 6y ago
You shouldn't need any convincing. The only way any trader (retail or otherwise) can consistently achieve above market risk-adjusted returns is by exploiting an information asymmetry. Essentially you would have to do your own proprietary research to find information that other traders don't have. The vast majority of retail traders who have better returns than an index fund are just lucky, not skilled. Sometimes you can flip a coin ten times and come up heads every time.
- blantonl 6y ago
  The probability of heads coming up 10 times in a row is a 1/1024 chance
  - natrik 6y ago
    So 1 in every thousand retail investors succeeds 10 times in a row. A lot more than a thousand retail investors out there.
  - ncallaway 6y ago
    Yes, exactly. So if we had a game where 1 million people flipped a coin 10 times coins, we'd expect nearly 1,000 to get heads on every flip.
  - summitsummit 6y ago
    which is absurdly high of a percentage to have people think they are skilled when they are lucky. if there are 10 million robinhood "traders" doing their tenth big trade today, then 9,765 of them could make a fortune by luck and think they are geniuses.
thrownaway954 6y ago
it is criminal. if you did it, you would be thrown in a cell for 30 years for wire fraud. remember that in america, the rules are different for corporations as there is plausible deniability for the board... as such, only fines are ever enforced which are taken into consideration when making such moves. jpmorgon might have to pay a 1B fine, but they might have made more than 5B in the transaction.
- summitsummit 6y ago
  > the rules are different for corporations as there is plausible deniability for the board can you expound on this? > jpmorgon might have to pay a 1B fine, but they might have made more than 5B in the transaction. why don't they just make ill gotten gains illegal?
  - thrownaway954 6y ago
    "can you expound on this?" no. "why don't they just make ill gotten gains illegal?" follow the money
smabie 6y ago
Retail traders are simply not affected by things like this. It's the HFT/market making firms that would be most damaged. The reason why retail traders rarely succeed is because the ones that are good move to the institutional level (as it is almost impossible to support yourself by trading alone). The bad ones invariably trade down their portfolio until they are forced to get a real job. This isn't to say that you shouldn't retail trade, but rather, don't rely on it as your sole source of income (unless you have at least 2mm-5mm dollars to trade with).
- spaced-out 6y ago
  > Retail traders are simply not affected by things like this. It's the HFT/market making firms that would be most damaged. I won't believe this without a citation to an academic study. This affects the underlying price of raw materials, which has a direct impact on the stock price of companies using those materials. The stock price of many of those companies has a direct impact on people's retirement and the solubility of pension funds, among other things. White collar crime does has victims.
  - hammock 6y ago
    Indirectly it has a small effect, and the biggest effect is on short term speculators. This becomes clear if you dig into the specifics of this particular spoofing operation
  - smabie 6y ago
    It seems like you've made up your mind, even without an academic study.
    - Supermancho 6y ago
      That comment is unnecessarily inflammatory and is not constructive.
  - x87678r 6y ago
    > This affects the underlying price of raw materials No it doesn't if you spoof orders it has only very short term effects.
M5x7wI3CmbEem10 6y ago
you reckon trading careers are on a decline? many of my former classmates pursued Trading over the once-fashionable M&A
bradj 6y ago
Isn’t this evidence that it isn’t tolerated? The bank is paying a billion dollars and three of the traders involved, including the executive, are facing criminal fraud charges in a RICO case.
hnracer 6y ago
> It's crazy that this kind of thing is tolerated in financial markets It's not tolerated, that's why they're being fined
subsubzero 6y ago
I don't know, I usually do pretty well as a retail trader. I do it on the side and stick to areas I know well, like tech. I usually make 10-15% of my total yearly income trading medium term. But that being said, stuff like this stacks the deck in the favor of big players. My personal frustration is activist investors/large short sellers who make a large short and then come up with a erroneous article to drop the stock and reap the benefits(Andrew Left - "Citron research") comes to mind.
- RantyDave 6y ago
  Don't talk to me about that.

missedthecue 6y ago

It's not tolerated? They're paying a billion dollars in fines for doing it.

jjoonathan 6y ago
How much did they make from it?
hu3 6y ago
If companies can get away with repeatedly breaking the rules then it is not forbidden. Just taxed in the form of fines.
moneytide1 6y ago
"The accord would end probes by the Justice Department, the Commodity Futures Trading Commission and the Securities and Exchange Commission into whether traders on JPMorgan’s precious metals and treasuries desks rigged markets, two of the people said." So $1B paid will stop further investigations? Meaning it can continue to manipulate and the fee is just the cost of doing business?
- mlindner 6y ago
  No? The fine is there to prevent them doing it further. They'll start investigations again if they see more of such activity.
ponker 6y ago
You use italics for the word “billion” but JPMorgan doesn’t.
ddoran 6y ago
The shareholders of JP Morgan are paying the fine. Not the bad actors behind the market abuse.
- vkou 6y ago
  The shareholders are part of the bad actor, because the shareholders control the board, and it's the board's job to police the company, and to make sure that it's actually ran well, and isn't just a free-for-all frat party. If the shareholders cared to avoid these sorts of judgements, they'd require that the firm operate more conservatively.
- hogFeast 6y ago
  The guy involved has left JPM, most of his team will have left too, they will have bonus payments clawed back, they will be banned from the industry, and are being charged criminally. Afaik, two people from this team are currently in prison.
  - deleted 6y ago
    [deleted]
chabes 6y ago
If they are making more than a billion from manipulating the markets, the billion dollar fine is part of the business plan.
- hogFeast 6y ago
  They didn't. The size of the fine is unrelated to the profit (at the very least, the fine is 10x the profit).
  - thrownaway954 6y ago
    that's what they are claiming. i'm sure they are not reporting everything they made. companies who do these sorts of manipulations know what they are doing and hide as much as they can.
klyrs 6y ago
But where's the law and order? Do the executives and traders get tackled, beaten, strangled and shot a dozen times in the back? Nope. Their employer gets fined and they keep their paychecks and bonuses.
- NovemberWhiskey 6y ago
  Did you read the bit in the article where the former head trader of the precious metals desk is being prosecuted for RICO violations? Along with several other traders from the desk?
okprod 6y ago
JPM probably made a lot more than that fine. First week orientation in my friend's MBA program before classes started was a session about ethics. He thought it would be about being ethical, but the professor said as businesses for any risky decision they should weigh potential profit versus penalty/punishment, because if it makes financial sense to pursue something, even an unethical endeavor, any penalties/fines are justified.
- SpeckOfDust 6y ago
  If that's true it's so messed up.

nradov 6y ago

You shouldn't need any convincing. The only way any trader (retail or otherwise) can consistently achieve above market risk-adjusted returns is by exploiting an information asymmetry. Essentially you would have to do your own proprietary research to find information that other traders don't have. The vast majority of retail traders who have better returns than an index fund are just lucky, not skilled. Sometimes you can flip a coin ten times and come up heads every time.

blantonl 6y ago
The probability of heads coming up 10 times in a row is a 1/1024 chance
- natrik 6y ago
  So 1 in every thousand retail investors succeeds 10 times in a row. A lot more than a thousand retail investors out there.
- ncallaway 6y ago
  Yes, exactly. So if we had a game where 1 million people flipped a coin 10 times coins, we'd expect nearly 1,000 to get heads on every flip.
- summitsummit 6y ago
  which is absurdly high of a percentage to have people think they are skilled when they are lucky. if there are 10 million robinhood "traders" doing their tenth big trade today, then 9,765 of them could make a fortune by luck and think they are geniuses.

thrownaway954 6y ago

it is criminal. if you did it, you would be thrown in a cell for 30 years for wire fraud. remember that in america, the rules are different for corporations as there is plausible deniability for the board... as such, only fines are ever enforced which are taken into consideration when making such moves. jpmorgon might have to pay a 1B fine, but they might have made more than 5B in the transaction.

summitsummit 6y ago
> the rules are different for corporations as there is plausible deniability for the board can you expound on this? > jpmorgon might have to pay a 1B fine, but they might have made more than 5B in the transaction. why don't they just make ill gotten gains illegal?
- thrownaway954 6y ago
  "can you expound on this?" no. "why don't they just make ill gotten gains illegal?" follow the money

smabie 6y ago

Retail traders are simply not affected by things like this. It's the HFT/market making firms that would be most damaged. The reason why retail traders rarely succeed is because the ones that are good move to the institutional level (as it is almost impossible to support yourself by trading alone). The bad ones invariably trade down their portfolio until they are forced to get a real job. This isn't to say that you shouldn't retail trade, but rather, don't rely on it as your sole source of income (unless you have at least 2mm-5mm dollars to trade with).

spaced-out 6y ago
> Retail traders are simply not affected by things like this. It's the HFT/market making firms that would be most damaged. I won't believe this without a citation to an academic study. This affects the underlying price of raw materials, which has a direct impact on the stock price of companies using those materials. The stock price of many of those companies has a direct impact on people's retirement and the solubility of pension funds, among other things. White collar crime does has victims.
- hammock 6y ago
  Indirectly it has a small effect, and the biggest effect is on short term speculators. This becomes clear if you dig into the specifics of this particular spoofing operation
- smabie 6y ago
  It seems like you've made up your mind, even without an academic study.
  - Supermancho 6y ago
    That comment is unnecessarily inflammatory and is not constructive.
- x87678r 6y ago
  > This affects the underlying price of raw materials No it doesn't if you spoof orders it has only very short term effects.

M5x7wI3CmbEem10 6y ago

you reckon trading careers are on a decline? many of my former classmates pursued Trading over the once-fashionable M&A

bradj 6y ago

Isn’t this evidence that it isn’t tolerated? The bank is paying a billion dollars and three of the traders involved, including the executive, are facing criminal fraud charges in a RICO case.

hnracer 6y ago

> It's crazy that this kind of thing is tolerated in financial markets It's not tolerated, that's why they're being fined

subsubzero 6y ago

I don't know, I usually do pretty well as a retail trader. I do it on the side and stick to areas I know well, like tech. I usually make 10-15% of my total yearly income trading medium term. But that being said, stuff like this stacks the deck in the favor of big players. My personal frustration is activist investors/large short sellers who make a large short and then come up with a erroneous article to drop the stock and reap the benefits(Andrew Left - "Citron research") comes to mind.

RantyDave 6y ago
Don't talk to me about that.