Because she is the President’s wife? We cannot have her getting in trouble and going to jail.
BTW, I do not think it was millions, I think it was about 250K.
Jeffery
No, it was more than that, that’s just what he gave back as part of the settlement deal. I’m not sure what his total take was, but still…
She did no such thing. By the time she was a pharmaceutical basher, she and the President had turned over their assets to a blind trust. It later came out that the advisor they had hired to manage the trust was under-weighting the sector in conservative accounts and shorting it in aggressive accounts. Lots of people were, in anticipation of the promised health-care reform.
I’m unaware of any evidence that the advisor shorted (or even under-weighted) pharmaceuticals in the Clinton account specifically. IIRC, the trust does not report its holdings publicly, in part to keep them, well, blind.
Oh, and it turned out to be a bad trade. The pharmaceutical sector performed just fine as the Clinton proposal crashed and burned.
On the total profits Lebed ran up, I could swear that I saw a number like $750,000 published somewhere, but a quick search of the Bloomberg and Dow Jones databases turns up no such number (or any number), so it may have been wrong and the stories revised.
The securities laws in this country were made to keep the security issuers and the brokerage community honest. As bad as the unregulated days before 1933 were for the individual investor, I bet the people who wrote the 1933 Act would find the gullibility and credibility of today’s chatroom investors beyond belief and not worthy of protection from each other. Somebody who buys or sells on a rumor from a chatroom is a fool who’s money is soon departing. Of course there are those PROFESSIONALS who upgraded Intel to a strong buy three days ago. So you buys (or sells) your stock and you takes your chances. If you don’t let the market punish the people who are greedy/naive/wrong/fools, this is what will jeopardize the capitalist system.
You are 100% right, of course, mipsman. But you have to remember that stock price manipulation affects more than just the idiots. A person who is conducting a long-term buy program, an employee whose option exercise price is tied to a stock’s trading average, the margin account of someone who properly shorted a bad stock only to see it manipulate up – all are victims of the actions of stock price manipulators and the sheep who trade on the hype.
I don’t think that this kind of manipulation is possible in any but the micro capitalized stocks. If the stock has a large enough float or it is held or followed widely enough, there are enough smart people who will short or accumulate the stock to stop the volatility.
Somebody who plays in micro capitalized NASDAQ stocks is holding a two edged blade. I do not know whose responsibility it is to inform them of the risk or if it is anyone else’s responsibility. It has been said that the SEC is there is keep the sheep from being shorn not to prevent wolves from being skinned. I believe the micro capitalized stock market is full of sheep in wolf’s clothing. They are paying the price.
One of the guys who helped write and enforce those SEC laws was old Joe Kennedy himself. The man who used those tactics (legally) to build a fortune in the decades prior.
What if someone had noticed what this kid was doing and decided to follow all of his bogus screen names to see what stocks he was pumping and dumping. With that knowledge it seems like a lot of money could be made without doing the pumping and dumping yourself.
Would that be against the law?
“Pump and dump” has been around for decades, of course. It’s just that online communication opens brand new avenues for doing it on a workable scale more quickly with less effort (you used to have to phone people, send out letters, or build up up a following as a “financial advisor”, etc).
Oh, it’s possible all right … it just takes more effort, and you probably aren’t going to do it exclusively by hyping on BBS’s and through unsolicited email. There are a lot of worries right now about organized crime moving into the stock market. “Pump and dump” style promotions are very popular with them. And when you have the resources to set up a dishonest brokerage house, or subvert an existing one, you can play the game with higher cap stocks, say “small” rather than the “microcap” range.
There are other ways that the ease of “spoofing” online information has facilitated stock market manipulation lately as well - can you say EMULEX?
Probably. But, if you had no documented connection to him, they would have a hell of a time proving you were doing it. The trick would be in being able to know when the “pumper / dumper” was going to dump, so you could pull your plug, too, or know when to make your short play. I’ve wondered about this one myself.
–Somebody did notice what he was doing…the SEC.
Since the SEC monitors all trades it’s reasonable to assume that they would run across Lebed’s activities first.
If somehow you got wind of Lebed’s game and mimicked them you would have likely gotten caught in the same net that hauled him in when the SEC started paying special attention to trades in that area. I agree with yabob on the lack of documented proof. But please bear in mind that they would have taken your computer and investigated where you went and what you did. If you used illegal information to personally profit there could be a case there.
Right. Obviously the SEC noticed. And obviously if you use illegal information to profit from the stock market that is illegal. What I am asking is if noticing what someone else appears to be doing on a public message board constitiutes illegal information.
Day traders are always looking for short term dramatic changes in stock price. If they notice a ton of activity for a microcap stock they are going to take notice. If they start seeing a pattern of the same 100 or so screen names on the chat boards hyping a stock which then causes a sharp rise and then a sharp fall they may take note of the pattern. Then they might think to themselves, “well here are these screen names pumping this stock and in the past this has been followed by a quick rise maybe I’ll try to get in now, or maybe I’ll wait until it rises a certain percent and then short it.” What illegal information have they used to profit?
Isn’t finding patterns what day trading all about?
Woah! Let’s go back to what you first said:
–Noticing what someone else appears to be doing on a public message board is not illegal. Spending the time to follow all of his bogus screen names (if possible) to determine what he was accomplishing could evenually lead you to conclude that this kid was operating on the scary side of the law. If you then decided to profit from your discovery instead of doing a Good Citizen thing (like alert the authorities) you could open yourself to prosecution. Why? Because you aren’t just following a pattern here. You are trading on illegal information.
Looking for patterns is one thing day traders do. Chartists and some technicians do the same thing. People who look for repeatable patterns obviously do not buy into the randomness theory of stock pricing.
Here’s something else day traders do: nine out of ten of 'em lose their shirts. That’s because true (legal) day trading is gambling.
Ok, so you are saying that the distinction is whether or not I believe that I have figured out that someone is doing something illegal. If I think I have found a pattern that involves hundreds of different people who like to post about different stocks and that they genuinely believe what they are posting, but I take advantage of the short term change in price then I haven’t broken any laws?
I suppose that this is exactly what some people who invested in the companies that this kid hyped were doing. Most of them of course didn’t get out in time to avoid the dump and lost money.
btw - Doug, I get the sense that you might think I am a day trader and that perhaps I try to do something like what I describe above. I’m not at all. In fact I don’t even trade in stocks. It is strictly long term mutual funds for my retirement money.
How many job offers you think the kid has got’ since he made the papers?
Actually, there are very strict requirements about the sale of the cheaper stocks (“penny stocks”). A broker is required to have the client sign all sorts of paperwork explaining that they are extremely risky and not for the average investor. A broker can’t even recommend the purchase of them unless the client has a history of purchasing penny stocks.
Under your circumstances the authorities would have to prove intent.
I’m slow, but eventually I’ll get there.
Ahh, Chuck. How many of the greedy public read what they sign? Especially if they have a SYSTEM they know will make them millions (the guy on that 30 minute TV show late last night said so!).
I got into penny stocks 30 years ago before they were even fashionable. Lost $3,000. Coulda lost more, but that was all I had.
Since then I pick my money managers out of the pages of Morningstar.
The problem with daytrading is that even if you have cobbled together some kind of system that occasionally “works” the commissions will eat your lunch.
Assume a really, really discount broker that’ll let you trade for $10 a shot. And assume you’re really conservative (a conservative daytrader? hmmm) and only execute 5 trades a day.
Oh, shoot. You guys do the math. You’re better at it, anyway.