Is High Frequency Trading “Insider Trading?”

Looking through the secret profit center behind Wall Street is like looking at wonderland through the eyes of Alice . It’s an amazing picture few ever get to see and fewer will ever understand. There are mega bucks floating everywhere. That is except into the pockets of those of us on Main Street who could use a little green coloring.

These HFT’s have been around since the 1990’s, ever fine tuning their computer software, searching for deals where the investors have not yet realized a stock is about to rise or fall, or where an exchange hasn’t provided consumers notice of a recent stock trade.

While billions of dollars are churned in mega seconds sometimes a million dollars and more in a fraction of a millisecond and on only a fraction of a penny profit. The stock market has become a fools paradise, left to the big hedge funds and their inside investors.

How do they work?

One way these traders make money is by exploiting the fact that stock indexes sometimes don't immediately reflect falling or rising prices of their component stocks. If GM shares for example rise 5 percent but an index fund that includes it such as the SPDR S&P 500 lags by a fraction of second to adjust, these HFT computers pick up the lag and buy or sell the stock in fractions of a second reaping large profits. HFT computers will “automatically” buy shares of SPDR S&P 500 at the lower price and then sell them again when they are fully valued, in other words, when the information is released to the general public.

Is this really Insider Trading, we believe it is because the information has not yet been released to the public!

This reminds me of the old days and Ben Siegel, who charged fees from bookmakers for a wire service that transmitted horse racing results. Often allowing bookmakers to lay off bets from a direct source after the race had been concluded.

It appears to be time that the SEC took a real hard look at these high frequency traders to determine if in fact they are trading on information that has not yet been made public.

Since Goldman Sachs is a part of this trading mechanism we need to take a hard look at its legitimacy.

Wall Street’s culture of Deception (Part 1)

The unwary investor is made to believe - by a press owned by the very people who are part of the Wall Street scam that they can make a killing in the stock market if they get lucky. Over the years’ “outsiders”, small-time investors have lost billions of dollars to the “insiders” who control and manipulate the stock market.

The small time investor believes that the stock market goes up and down according to what he or she reads in the Wall Street Journal or hears about on their evening NEWS program: interest rates, inflation rates, wholesale prices, gross national product, public fears about foreign and domestic events, and the ranting of the head of the "Federal" Reserve Board.

This is all a game, a con to make the hapless investor believe that the rise and fall in stock prices is not being manipulated by the specialists. The fact is that specialists, working at the largest firms and hedge funds are creating the ups and downs of the market to bring them profits at the expense of the rest of us. In reality it’s the bankers and investment houses against the working class of America, and Congress and the While House allow this SCAM to continue.

This is how the Stock SCAM works

The insider buys stocks at the lowest possible price, using one of the magic tricks of the market called short selling (selling stocks you don't yet own in the hopes that the price will drop, so that you can purchase it back at a lower price; the difference between what you sold it for and what you purchased it back at is your profit): This parable was made famous by John D Rockefeller

• Since they control the stock prices, they simply begin lowering the prices
• They "borrow" the stock from their or another brokerage firm's pool, with the understanding that at a later date they will return the shares
• The Wall Street Con Game News will announce that stock prices dropped sharply on light trading, which is a cover for the insiders' actual manipulation of the decrease in stock prices. The Insiders don't want heavy trading and straight-line lowering of stock prices, else they might have to buy a lot of stock at a higher price than desired. So they usually lower prices through a series of ups and downs of the market, dealing with small investors' shares as they go.
• The SEC rules prohibit NYSE members from "demoralizing the market by effecting short sales at or below a price lower than that of the last sale." But insiders have an “insider loophole” allowing them to sell short on downticks (drops in stock prices) without having to report these transactions as short sales. Those same SEC rules force the unsuspecting, small-time investor to sell short only on upticks - when stock prices are higher than the last preceding price. This is a very neat scam, and small time investors aren’t even aware that they have been had.

When the insiders have purchased their inventories of stocks at the lowest possible price (let's say a million shares at an average of $20 a share: $20,000,000 investment), they then begin increasing stock prices.

• They will wait until the stock prices reach a top price where they can realize windfall profits - let's say the stock reaches the price of $40 a share.
• At this point the insiders sell their million shares at $40 a share and receive $40,000,000. A profit of $20 million is easy if the con game is fixed in your favor.

When the insiders want to buy stocks, they lower prices - and wait till the stocks are at the lowest price possible before buying. The investors have been herded into "panic buying" as the prices drop. When the specialists want to sell stocks, they raise prices and sell at the highest price. The uninformed investor is told that he or she must get in on the skyrocketing market boom. The roller-coaster of the stock market is not a natural phenomenon at all, as the Wall Street con game would have us believe. It's simply the Insiders doing their thing making billions of dollars from unsuspecting investors.

That $20 million has to come from somewhere – and it does, it comes from the small investors who didn't have a clue about what was going on.

As an example, the Panamanian-registered Pilgrim Investment Trust, controlled by the Bush family, in April 2000 was about 78% long. By the end of 2000, they were 78% short, and, by the end of 2001, that trust was 98% short. In essentially the same short position was the Houston Energy Trust, another deep offshore Republican trust whose investors include Henry Kissinger, Paul Bremer, James Baker, and George Schultz.

Get the picture.