New data from the US Securities and Exchange Commission (SEC) show that only 3.2% of the orders placed in the stock market in the second quarter of 2013 actually went through.
Author: Edouard Chazal
Financial Apartheid
The increasing reliance on private, rather than public, markets creates a system of financial apartheid. Retail investors, and the mutual funds they depend upon, have fewer and fewer U.S. companies to pick from. Private equity firms get access to the future Facebooks and Googles of the world, and they extract all they can before exiting into what is left of the public markets.
The Hunt for Steve Cohen
Barai, Freeman, and Longueuil—who jokingly called themselves the Hindu, the Jew, and the Catholic—had been gathering, swapping, and trading on inside information since at least 2006, when they were all at other firms. They called their exchanges “data dumps” or “data smackdowns,” and Barai later told the F.B.I. that they’d mark them on their calendars as a “threesome” or as “don, sam, noah—sex.” They continued once Freeman and Longueuil joined SAC, in 2008, Freeman in the Boston office, Longueuil in New York. The trio developed a series of valuable sources who had contacts inside several tech companies. One, Freeman later told the F.B.I., was a consultant named Doug Munro, who ran a research firm called Worldwide Market Research and, according to both Freeman and Barai, had inside information on Cisco. Munro, they said, had an e-mail account called juicylucy_xxx@yahoo.com, and he’d send Barai an e-mail saying “lucy is wet” when he was supposed to check the account for new information. (Munro has not been charged.)
My Time at Lehman
I remember taking the subway home each night asking myself “What have I done today? What have I created?” And it meant that I couldn’t sleep well, I was embarrassed to tell people what I did, and I felt as though I personally owed every single person that I mucked over in the markets each day. The experience reminded me of one as a child when I unfairly sold some worthless items to neighbors at a stoop sale in front of our house in Brooklyn. When my parents found out that night, they made me go from home to home on our block returning the money.
How to Save American Finance from Itself
What about the possibility of cutting off the bubbles before they become dangerously large? It has often been proposed that the Fed should limit asset-price inflation in much the same way that it is committed to limiting goods-price inflation. In that view, the Fed should have choked off both the dot-com and house-price bubbles before they became large enough to do much damage. The usual counter-argument is that it is difficult to distinguish an asset bubble from a rise in price that is justified by “fundamentals.”
