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I wonder if in current climate this could be prosecuted as a market manipulation of sorts. Things were different back then though.
by tener 4y ago
I wonder if in current climate this could be prosecuted as a market manipulation of sorts. Things were different back then though.
- Y-bar 4y agoSince open speculation can not be considered manipulation under the legal framework today I suppose you ask about the Bank's role in the problems created for itself. So... Isn't the entire point of Bank of England and other central banks to manipulate the market, so why would they be prosecuted?
- t0mas88 4y agoWhat would put him at risk in todays legal climate is his own choice to short sell the GBO, but the coordination with others to make transactions that would cause it to drop. Then you're not making investment decisions based on your belief that the value of the GBP would decrease, but you're asking others to make specific transactions with the purpose of changing the GBP exchange rate so you could benefit from it.
- Y-bar 4y agoBy "him" I suppose you mean the head of BoE, because nobody other than BoE themselves did this.
- t0mas88 4y agoI'm not appointing any responsibility to either side nor am I qualified to do so. I'm just sharing the viewpoint that Soros apparently convinced other investors in private to make certain transactions that affect his own (public and legal) trade, and that that part of his move carries a risk of being labeled market manipulation.
- Y-bar 4y agoI don't understand your argument here at all unfortunately. Why would private citizens' investment advice be illegal? The entire Reddit community WallStreetBets (not claiming they have sound investment advice, because they don't) should be in jail then, because they effectively say "please invest like we do, because we will both profit". There is lots of investments based not on the belief of somethings intrinsic value, but on the belief on other investors belief of somethings value. In fact, I would say that the majority of trades happen due to "making investment decisions based on your belief that the value [of X would Y]" as you say. So trades at discrepancies on value beliefs. If this is a good thing or not is debatable, but it is the reality and how would that be related to market manipulation. I get the distinct feeling that you are trying to say something between the lines but it is hard to know. Can you elaborate on your points?
- hajile 4y agoWas it open speculation though? Rich people and politicians get insider trading information all the time. It may be hard to prove (or effectively impossible to investigate in the case of US politicians due to Obama), but such speculations usually don't fall out of the sky.
- biorach 4y agoYes, it was very much open speculation. It was widely believed at the time that Sterling had been pegged at an unsustainably high value. Based on this belief Soros and the other speculators put large amounts of money on Sterling depreciating, which happened and they earned massive profits. There was no "insider information".
- refurb 4y agoI mean the Bank of England was trying to control the exchange rate, Soros made a bet they couldn’t maintain it and was right.
- hkt 4y agoThe speculators betting against it added to the bank's difficulties, in fairness: they didn't stand outside the process, they were part of it.
- refurb 4y agoHow did they add to the banks difficulties? My understanding is the BOL tried to maintain the exchange rate. Speculators bet they couldn't do it. If the speculators had never made their bets the exchange rate still would have collapsed because foreign banks were selling their GBP far faster than the BOL could buy it (or had the capacity to buy).