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This sort of stock market manipulation is illegal in US. Nothing to be proud of. Germany already started criminal investigation. Hope that people directly respo

by gaika 18y ago

This sort of stock market manipulation is illegal in US. Nothing to be proud of. Germany already started criminal investigation. Hope that people directly responsible for it will go to jail.

Tichy 18y ago
It sounds as if all Porsche did was to buy some options and some stock, why should it be illegal? Why is any time somebody loses money on the markets now a "failure of the system" and new regulations are being called for? I think they did not even exert the possible squeeze, the price only rose because of fear that they might exert it. Maybe such a squeeze should be illegal (asking for an infinitely high price for stock), but it is difficult to imagine a viable law for it? I suppose going short always carries an infinitely high risk.
eru 18y ago
As far as I know no (German) laws were broken.
- gaika 18y ago
  http://www.ft.com/cms/s/0/0a0edf02-a621-11dd-9d26-000077b07658.html http://www.ft.com/cms/s/0/0a0edf02-a621-11dd-9d26-000077b076...
  - sokoloff 18y ago
    I doubt anyone will do jail time for this, if even any laws were broken. And if Porsche settles for the maximum 1 million Euro fine, that's not even 1/1000th of the profits they made on the backs of the shorts. It's not like their aspiration to takeover VW was any kind of a secret in either the auto or finance worlds. Frankly, I have no sympathy for market speculators who got reamed here by shorting VW. I do have some sympathy for people who were short the DAX index as a broad-based hedging strategy and got trapped by the leap in the DAX. Then again, "the market can remain irrational longer than you can remain solvent" is a true today as it was 75 years ago.
- ig1 18y ago
  When it comes to market manipulation it's very hard to say what's legal and what's not, that's why investment banks have huge compliance departments who have immense expertise in these areas. It's unlikely Porsche had that kind of legal advice so could have accidently broken the law. The brokerage/advisory firms they used could also be liable, as regulated firms have an obligation to inform the regulator if they believe a client is commiting market manipulation.
nradov 18y ago
Why should the Porsche managers go to jail? How exactly was what they did immoral? Anyone who speculates by unhedged shorting has to expect to go bust occasionally. That's just part of the game.
- gaika 18y ago
  Stock market manipulation for whatever reason can cause lots of problems for other people. At times like this it can cause a market panic. Just because you have more money doesn't mean you should be able to fix prices. That's why entities who own more than 5% of a stock are restricted in what they can do (in US).
  - nradov 18y ago
    A market panic is when everyone rushes to sell at once; this seems like the opposite of a panic. Those who had long positions aren't complaining. And I can't see that Porsche was fixing the price of VW stock; they were apparently doing little or no selling so the price must have been set by other traders.

by gaika 18y ago

This sort of stock market manipulation is illegal in US. Nothing to be proud of. Germany already started criminal investigation. Hope that people directly responsible for it will go to jail.

Tichy 18y ago

It sounds as if all Porsche did was to buy some options and some stock, why should it be illegal? Why is any time somebody loses money on the markets now a "failure of the system" and new regulations are being called for? I think they did not even exert the possible squeeze, the price only rose because of fear that they might exert it. Maybe such a squeeze should be illegal (asking for an infinitely high price for stock), but it is difficult to imagine a viable law for it? I suppose going short always carries an infinitely high risk.

eru 18y ago

As far as I know no (German) laws were broken.

gaika 18y ago
http://www.ft.com/cms/s/0/0a0edf02-a621-11dd-9d26-000077b07658.html http://www.ft.com/cms/s/0/0a0edf02-a621-11dd-9d26-000077b076...
- sokoloff 18y ago
  I doubt anyone will do jail time for this, if even any laws were broken. And if Porsche settles for the maximum 1 million Euro fine, that's not even 1/1000th of the profits they made on the backs of the shorts. It's not like their aspiration to takeover VW was any kind of a secret in either the auto or finance worlds. Frankly, I have no sympathy for market speculators who got reamed here by shorting VW. I do have some sympathy for people who were short the DAX index as a broad-based hedging strategy and got trapped by the leap in the DAX. Then again, "the market can remain irrational longer than you can remain solvent" is a true today as it was 75 years ago.
ig1 18y ago
When it comes to market manipulation it's very hard to say what's legal and what's not, that's why investment banks have huge compliance departments who have immense expertise in these areas. It's unlikely Porsche had that kind of legal advice so could have accidently broken the law. The brokerage/advisory firms they used could also be liable, as regulated firms have an obligation to inform the regulator if they believe a client is commiting market manipulation.

nradov 18y ago

Why should the Porsche managers go to jail? How exactly was what they did immoral? Anyone who speculates by unhedged shorting has to expect to go bust occasionally. That's just part of the game.

gaika 18y ago
Stock market manipulation for whatever reason can cause lots of problems for other people. At times like this it can cause a market panic. Just because you have more money doesn't mean you should be able to fix prices. That's why entities who own more than 5% of a stock are restricted in what they can do (in US).
- nradov 18y ago
  A market panic is when everyone rushes to sell at once; this seems like the opposite of a panic. Those who had long positions aren't complaining. And I can't see that Porsche was fixing the price of VW stock; they were apparently doing little or no selling so the price must have been set by other traders.