3 ms·
From reading the press release I did not understand what was illegal. Could someone clarify what law they violated? (not trying to defend the firm-I'm sure what
by Scrabblefiend 12y ago
From reading the press release I did not understand what was illegal. Could someone clarify what law they violated? (not trying to defend the firm-I'm sure what they did was really bad, I legitimately do not understand the logistics of trading)
- lscore720 12y agoEssentially, it's like any auction fraud (i.e. convincing friends to bid up prices on your eBay item, so you can sell it for higher). They firm created artificial demand to raise the price of the stock before selling it.
- icu 12y agoWhat they did - fraud. How they did it - shill bidding.[1] Why this is illegal - You aren't allowed to manipulate the market. Why the regulator acted - They needed to make an example of a HFT firm as there is a perception that HFT firms manipulate the market but regulators don't understand and therefore can't regulate them. My take - This was 'low hanging fruit' and an 'easy win'. Obviously market participants need to trust in the integrity of the market prices and I think the firm in question made it obvious what they were doing. I'm skeptical that the SEC will catch the 'big boys' who are a heck of a lot better at covering their tracks. [1] See the auction section of the Wikipedia page here: http://en.m.wikipedia.org/wiki/Shill http://en.m.wikipedia.org/wiki/Shill