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Clients chose to go against their own best interest? For what reason? That doesn't make much sense. What makes more sense is that those clients were falsely led

Clients chose to go against their own best interest? For what reason? That doesn't make much sense. What makes more sense is that those clients were falsely led to believe that "simplicity and lowest broker fees" was the best choice.

sophacles 11y ago
Without knowing in depth all the numbers involved, it's hard to declare it's clients choosing against their own best interest. There are considerations besides "most potentially profitable execution of a transaction or set of transactions". These concerns include but are not limited to: * risk tolerance * direct and indirect costs (fees wages etc) associated with other methods. * speed and/or predictability of transactions * how this particular bit of business fit into an overall hedging strategy * partnership considerations with the bank These all factor into why a client would choose one option over another, even if the chosen option looks like a lower gain. By analogy: this week I chose to have the dealership replace a broken mirror on my vehicle, rather than wait a day and have a nearby mechanic do so for $100 less. This choice was not the least expensive option, but it was the lowest hassle option. In terms of dollars it wasn't the most profitable transaction. In terms of spent time, it was still not the most profitable transaction. In terms of my risk tolerance and hassle, it was a good decision and I'm fine with it.
- fnordfnordfnord 11y ago
  Let's not confuse this thread with an yet another appeal to "more study". Federal regulators, who are infamous for their inaction have made the rare determination that "the numbers" don't add up, with at least one SEC commissioner publicly furious that the SEC hasn't gone far enough. https://www.sec.gov/news/statement/stein-waivers-granted-dissenting-statement.html https://www.sec.gov/news/statement/stein-waivers-granted-dis... I'm not persuaded by your analogy in which you compare a one-time transaction relating to an infrequent type of event to a systematic conspiracy to deceive clients and competitors alike in transactions that occur frequently.
  - sophacles 11y ago
    Lets not confuse a discussion of a single point, namely why a person or group of people would choose something that appears to not be in their interest from my limited point of view, with a statement either for or against, any other actions. Hell for all I know, the clients could have been flat out told: "look this whole thing is market manipulation, we're getting you profit consistency and stability that you could not otherwise get, albeit at a lower rate than individual transactions". I regularly choose index funds over picking stocks for the reason of lower risk albeit at lower profit potential. I'm not saying anyone did anything right or wrong. I was just discussing a particular point that seemed relevant. It is possible that there was wrong-doing, that there was market manipulation, and that the clients still chose reasonably and in their interests despite that. Going back to my analogy, just because I made the decision the way I did, does not mean the dealer is or is not involved in deceptive business practices, gouging or other scummy tactics.

sophacles 11y ago

Without knowing in depth all the numbers involved, it's hard to declare it's clients choosing against their own best interest. There are considerations besides "most potentially profitable execution of a transaction or set of transactions". These concerns include but are not limited to: * risk tolerance * direct and indirect costs (fees wages etc) associated with other methods. * speed and/or predictability of transactions * how this particular bit of business fit into an overall hedging strategy * partnership considerations with the bank These all factor into why a client would choose one option over another, even if the chosen option looks like a lower gain. By analogy: this week I chose to have the dealership replace a broken mirror on my vehicle, rather than wait a day and have a nearby mechanic do so for $100 less. This choice was not the least expensive option, but it was the lowest hassle option. In terms of dollars it wasn't the most profitable transaction. In terms of spent time, it was still not the most profitable transaction. In terms of my risk tolerance and hassle, it was a good decision and I'm fine with it.

fnordfnordfnord 11y ago
Let's not confuse this thread with an yet another appeal to "more study". Federal regulators, who are infamous for their inaction have made the rare determination that "the numbers" don't add up, with at least one SEC commissioner publicly furious that the SEC hasn't gone far enough. https://www.sec.gov/news/statement/stein-waivers-granted-dissenting-statement.html https://www.sec.gov/news/statement/stein-waivers-granted-dis... I'm not persuaded by your analogy in which you compare a one-time transaction relating to an infrequent type of event to a systematic conspiracy to deceive clients and competitors alike in transactions that occur frequently.
- sophacles 11y ago
  Lets not confuse a discussion of a single point, namely why a person or group of people would choose something that appears to not be in their interest from my limited point of view, with a statement either for or against, any other actions. Hell for all I know, the clients could have been flat out told: "look this whole thing is market manipulation, we're getting you profit consistency and stability that you could not otherwise get, albeit at a lower rate than individual transactions". I regularly choose index funds over picking stocks for the reason of lower risk albeit at lower profit potential. I'm not saying anyone did anything right or wrong. I was just discussing a particular point that seemed relevant. It is possible that there was wrong-doing, that there was market manipulation, and that the clients still chose reasonably and in their interests despite that. Going back to my analogy, just because I made the decision the way I did, does not mean the dealer is or is not involved in deceptive business practices, gouging or other scummy tactics.