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Newedge Market Manipulation: Joe Saluzzi Exposed This Years Ago

Posted by Larry Doyle on July 11, 2013 7:51 AM |

I awake this morning and see a headline of a lead story on The Wall Street Journal jump out at me.

Brokerage Faces Record Fine

My interest is piqued.  What might it be? I quickly peruse the commentary and see words and phrases used that should concern any investor and/or trader including: manipulate U.S. markets . . . risks to the financial system . . . damage investor confidence . . . considerable systemic risk to the marketplace.

I then read of a new word for front-running, that is, “spoofing” and how traders utilized wash trades,”in which a firm acts as buyer and seller in the same trade to distort market activity. The practice can create the illusion of heavy trading volume that lures firms that are tracking for such activity.” 

The icing on the cake in this review was how this brokerage firm, Newedge USA, allowed some traders to engage in naked short selling, another manipulative activity.

I put my coffee down and thought I had entered the twilight zone or some other sort of time warp. Why so?

I paused to think that here I sit with the calendar showing it to be July 2013 and how it was this very month 4 full years ago when I first learned and shared with readers information on almost all these manipulative practices. Who brought them to our attention then and still does today? “The man in the arena”, Joe Saluzzi, and his sidekick Sal Arnuk at Themis Trading.

4 years and untold amounts of manipulation and investors are fed a $9.5 million fine as the cops flexing their muscle . . . NOW? Why is it that the activity at Newedge — and let’s be real, at so many other firms as well — is allowed to persist for years (from 2008 until late 2011, in the case of Newedge) and a token fine with no admission of guilt is allowed to pass as justice?

As we have come to learn all too well, this is what happens when the regulators are in bed with the industry.

Think there is a correlation with this sort of manipulative activity ongoing in the marketplace and the serious decline in real volume across a number of equity exchanges and other  market sectors as well?

I do.

A $9.5mm record fine?

I am not impressed.

Navigate accordingly.

Larry Doyle 

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I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

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