HOW ELON MUSK HAS LIED TO YOU!
Take this list to Elon Musk. Hand it to him. Ask him to prove to you, with proof, that the U.S. Congress can confirm, or deny, that he either did, or did, not lie to you, the taxpayer, about these things:
- Tesla has been charged with covering up the fact that hackers have been hacking their cars and taking the cars over for at least 4 years. Elon Musk, do you deny this?
- Your employees have been burned alive and set on fire by your own factories. Was there an OSHA investigation of these incidents?
- Has your company, or anyone associated with your company, ever hired multitudes of fake bloggers, and Troll Farms, to post fake positive reviews about Tesla motors in order to simulate interest?
- Has Tesla Motors ever compensated a publisher, or industrial rating company, for positive reviews or ratings?
- Does Tesla Motors believe that the coordinated manipulation of the public perception of a company, trading on the stock market, via the dissemination of inaccurate data by the companies spokespeople is not stock fraud and a violation of SEC laws?
- What percentage of Tesla Motors do Google's investors, staff and executives own cumulatively and has Google ever rigged search engine results in order to push your personal self-promotion to the front page of Google, while hiding any negative articles about you?
- How much money did those Tesla/Google investors contribute to election campaigns from 2007 to today? Which campaigns? Did the winners in any of those campaigns award U.S. taxpayer funds to the portfolio companies of those investors? How much money?
- When Tesla Motors applied for the Department of Energy funds Elon Musk stated that Tesla was in exceptional financial health, yet now Elon Musk, and his senior staff, have been recorded stating that the company was nearly bankrupt then. In light of these more recent revelations, is that not a felony violation of the federal "Section 136 Law" which states that 'a company cannot be on the verge of bankruptcy or it shall not receive Department of Energy funds'? New disclosures show that Tesla stated information in it's federal application which Tesla's founders and staff have stated they knew was false at the time. Should Tesla be prosecuted for this?
- Did Deloitte, under contract to Tesla, arrange false accounting via the Tesla Wells Fargo bank account while Deloitte was also acting, in conflict of interest, as the Department of Energy reviewer of applicants?
- You lied about asking NHTSA for a safety review. They asked for one, you did not. You never completed the safety review. You were afraid of the results. You paid to have the safety review cut-off. Is that not corruption?
- Does Tesla Motors have a confidential relationship with a national group of reporters, from different publications, who have agreed to release Tesla-positive news spin stories on a synchronized basis, at the same time, in order to coverup Tesla investigation disclosures and artificially accelerate stock market vales? Has Tesla Motors arranged with Google to have negative Tesla Motors stories down-ranked while having positive Tesla stories up-ranked? Would that be considered stock fraud?
- You batteries cause cancer, brain damage, fetal damage and liver damage from the fumes they emit, when they catch on fire. This is a proven fact. Why are you refusing to disclose this to your buyers?
- How many Senators and their families, that you are aware of, own stock in Tesla Motors?
- Were you, Elon Musk, promised any NASA contracts, in advance of the closure of a portion of NASA, in exchange for campaign funding from Tesla and Google investors?
- How many Senators, their families and Google-related investors, that you are aware of, hold stock in lithium-ion battery related companies?
- Has Steven Chu, the former head of the Department of Energy, ever had a personal relationship with any Tesla staff or investors?
- Has Senator Dianne Feinstein, or her family, ever had a personal relationship with any Tesla staff or investors?
- Why are Tesla and Solyndra on the same physical plot of land controlled by Dianne Feinstein’s family funds?
- Has anyone from Senator Dianne Feinstein's office also worked for Tesla Motors and/or Solyndra?
- Has anyone associated with Senator Dianne Feinstein's family, named Herb, ever supplied staffing services to Tesla and Solyndra?
- Has anyone associated with Senator Dianne Feinstein's family had any relationship with the real estate transactions involving Tesla and/or Solyndra real estate?
- Panasonic, your battery partner, has been charged with organized crime, dumping, price fixing, the deaths of thousands of battery workers from toxic poisoning and with building lethal battery factories that destroyed all of the towns near them. Is that a problem?
- Do your battery packs release toxic and/or cancer causing fumes when they burn?
- What was your relationship with Eric Strickland, the head of the National Highway Transportation safety agency who quit his job 48 hours after being notified that the toxic Tesla report he knew about was going public?
- Did you falsify lithium-ion safety reports?
- Bernard Tse, your battery program director, and 7 other senior staff, provided your company with numerous severely concerning lithium-ion safety reports which were never presented to the Department of Energy. Were these reports covered up because the Senators and Investors of Google and Tesla all have ownership interest in the lithium-ion industry?
- Have you, Elon Musk, ever spied on his own employees and competitors?
- Have you, Elon Musk, ever undertaken sabotage programs against his competitors?
- Did your SEC filings use tax credits from the White House to make Tesla look like it had profits?
- What was Tesla's debt ratio at the time that Tesla applied for the DOE loan? Why do you think Tesla had the worse debt ratio of any applicant yet Tesla was awarded funds with almost no review?
- Why has Tesla spent billions, and a decade, to only sell a few cars when all of your competitors have done 20 times better on less money and in less time? Why are over 200 technical problems with the car documented online by Tesla owners yet you say nothing about those problems? Why are you being sued for fraud under the Federal "Lemon Law"?
- Why were your cars $100,000.00 over budget PER CAR, at the time of your Department of Energy loan application, yet nobody at the DOE commented about that in their review notes?
- Did Steven Chu's senior staff: Matt Rogers and Steven Spinner have any relationship with Tesla-related investors prior to Chu hiring them at the DOE? Was it coincidental that McKinsey Consulting, the company they worked for, produced all of the pitch documents for the White House and Congress, which were used to steer the Federal funds to Tesla Motors?
- Was Tesla Motors funded as a gift to campaign investors?
- Are you trying to build a battery factory not far from Mexico in order to take advantage of Mexican workers? Are you concerned that most battery factory workers in China were poisoned with toxins? Are you concerned that your battery factory will ENCOURAGE immigration abuse and devastate our border?
- The founders ex-partners, investors, buyers, suppliers, employees and ex wives have sued you, Elon Musk, for fraud? What does that say about you Mr. Musk?
- Did California State Officials, in Sacramento, California, ever manipulate tax laws and decisions to exclusively benefit Tesla Motors in exchange for perks?
- What percentage of your buyers have killed members of the public with their Tesla Vehicles? Why is that number, in relative terms, higher than any other car company? How many Tesla drivers have been killed?
- Tesla also had Department of Energy cash participation fee waived, per your own staff in public comment. When all other companies were required to pay the fee, why was Tesla waived?
- According to staff aides, former DOE staff and finance controllers, Rahm Emanual and David Axelrod, while in the White House, "ordered Tesla to be funded even though Tesla was noted as an unsound company by finance consultants to the Government".
- Former DOE staff, and White House aides, have stated that the Tesla "wave through" was a kickback to Tesla's and Googles investors who were massive campaign donors.(Google co-owns Tesla- Hence Google never allows any actual negative news about Tesla on it's servers). Is that true?
- Former NASA staff, and engineers, have stated that they were fired and the exact same portion of NASA shut down, that Tesla's Space X company then immediately took over as an additional kickback to Tesla and Google investors. Those investors: in Tesla, Google, and Space X, are all the same campaign contributors. Was that a campaign financing kick-back?
- You have spent more money to sell less cars than any car company in history? Are you just a money laundering front for campaign cash?
- Have White House staff agreed to protect Tesla, at all costs, in order to keep Mitt Romney's prediction from coming true and to cover campaign billionaires?
- Do your VC investors pump the stock market rating by buying their own Tesla stock when bad news comes out about Tesla in order to create a synthetic cover-story short term stock rise?
- Mr. Musk, we have over 1000 other incriminating facts to ask you about, when may we cover the rest of these questions…?
Take this list to Elon Musk. Hand it to him. Ask him to prove to you, with proof, that the U.S. Congress can confirm, or deny, that he either did, or did, not lie to you, the taxpayer, about these things:
- Tesla has been charged with covering up the fact that hackers have been hacking their cars and taking the cars over for at least 4 years. Elon Musk, do you deny this?
- Your employees have been burned alive and set on fire by your own factories. Was there an OSHA investigation of these incidents?
- Has your company, or anyone associated with your company, ever hired multitudes of fake bloggers, and Troll Farms, to post fake positive reviews about Tesla motors in order to simulate interest?
- Has Tesla Motors ever compensated a publisher, or industrial rating company, for positive reviews or ratings?
- Does Tesla Motors believe that the coordinated manipulation of the public perception of a company, trading on the stock market, via the dissemination of inaccurate data by the companies spokespeople is not stock fraud and a violation of SEC laws?
- What percentage of Tesla Motors do Google's investors, staff and executives own cumulatively and has Google ever rigged search engine results in order to push your personal self-promotion to the front page of Google, while hiding any negative articles about you?
- How much money did those Tesla/Google investors contribute to election campaigns from 2007 to today? Which campaigns? Did the winners in any of those campaigns award U.S. taxpayer funds to the portfolio companies of those investors? How much money?
- When Tesla Motors applied for the Department of Energy funds Elon Musk stated that Tesla was in exceptional financial health, yet now Elon Musk, and his senior staff, have been recorded stating that the company was nearly bankrupt then. In light of these more recent revelations, is that not a felony violation of the federal "Section 136 Law" which states that 'a company cannot be on the verge of bankruptcy or it shall not receive Department of Energy funds'? New disclosures show that Tesla stated information in it's federal application which Tesla's founders and staff have stated they knew was false at the time. Should Tesla be prosecuted for this?
- Did Deloitte, under contract to Tesla, arrange false accounting via the Tesla Wells Fargo bank account while Deloitte was also acting, in conflict of interest, as the Department of Energy reviewer of applicants?
- You lied about asking NHTSA for a safety review. They asked for one, you did not. You never completed the safety review. You were afraid of the results. You paid to have the safety review cut-off. Is that not corruption?
- Does Tesla Motors have a confidential relationship with a national group of reporters, from different publications, who have agreed to release Tesla-positive news spin stories on a synchronized basis, at the same time, in order to coverup Tesla investigation disclosures and artificially accelerate stock market vales? Has Tesla Motors arranged with Google to have negative Tesla Motors stories down-ranked while having positive Tesla stories up-ranked? Would that be considered stock fraud?
- You batteries cause cancer, brain damage, fetal damage and liver damage from the fumes they emit, when they catch on fire. This is a proven fact. Why are you refusing to disclose this to your buyers?
- How many Senators and their families, that you are aware of, own stock in Tesla Motors?
- Were you, Elon Musk, promised any NASA contracts, in advance of the closure of a portion of NASA, in exchange for campaign funding from Tesla and Google investors?
- How many Senators, their families and Google-related investors, that you are aware of, hold stock in lithium-ion battery related companies?
- Has Steven Chu, the former head of the Department of Energy, ever had a personal relationship with any Tesla staff or investors?
- Has Senator Dianne Feinstein, or her family, ever had a personal relationship with any Tesla staff or investors?
- Why are Tesla and Solyndra on the same physical plot of land controlled by Dianne Feinstein’s family funds?
- Has anyone from Senator Dianne Feinstein's office also worked for Tesla Motors and/or Solyndra?
- Has anyone associated with Senator Dianne Feinstein's family, named Herb, ever supplied staffing services to Tesla and Solyndra?
- Has anyone associated with Senator Dianne Feinstein's family had any relationship with the real estate transactions involving Tesla and/or Solyndra real estate?
- Panasonic, your battery partner, has been charged with organized crime, dumping, price fixing, the deaths of thousands of battery workers from toxic poisoning and with building lethal battery factories that destroyed all of the towns near them. Is that a problem?
- Do your battery packs release toxic and/or cancer causing fumes when they burn?
- What was your relationship with Eric Strickland, the head of the National Highway Transportation safety agency who quit his job 48 hours after being notified that the toxic Tesla report he knew about was going public?
- Did you falsify lithium-ion safety reports?
- Bernard Tse, your battery program director, and 7 other senior staff, provided your company with numerous severely concerning lithium-ion safety reports which were never presented to the Department of Energy. Were these reports covered up because the Senators and Investors of Google and Tesla all have ownership interest in the lithium-ion industry?
- Have you, Elon Musk, ever spied on his own employees and competitors?
- Have you, Elon Musk, ever undertaken sabotage programs against his competitors?
- Did your SEC filings use tax credits from the White House to make Tesla look like it had profits?
- What was Tesla's debt ratio at the time that Tesla applied for the DOE loan? Why do you think Tesla had the worse debt ratio of any applicant yet Tesla was awarded funds with almost no review?
- Why has Tesla spent billions, and a decade, to only sell a few cars when all of your competitors have done 20 times better on less money and in less time? Why are over 200 technical problems with the car documented online by Tesla owners yet you say nothing about those problems? Why are you being sued for fraud under the Federal "Lemon Law"?
- Why were your cars $100,000.00 over budget PER CAR, at the time of your Department of Energy loan application, yet nobody at the DOE commented about that in their review notes?
- Did Steven Chu's senior staff: Matt Rogers and Steven Spinner have any relationship with Tesla-related investors prior to Chu hiring them at the DOE? Was it coincidental that McKinsey Consulting, the company they worked for, produced all of the pitch documents for the White House and Congress, which were used to steer the Federal funds to Tesla Motors?
- Was Tesla Motors funded as a gift to campaign investors?
- Are you trying to build a battery factory not far from Mexico in order to take advantage of Mexican workers? Are you concerned that most battery factory workers in China were poisoned with toxins? Are you concerned that your battery factory will ENCOURAGE immigration abuse and devastate our border?
- The founders ex-partners, investors, buyers, suppliers, employees and ex wives have sued you, Elon Musk, for fraud? What does that say about you Mr. Musk?
- Did California State Officials, in Sacramento, California, ever manipulate tax laws and decisions to exclusively benefit Tesla Motors in exchange for perks?
- What percentage of your buyers have killed members of the public with their Tesla Vehicles? Why is that number, in relative terms, higher than any other car company? How many Tesla drivers have been killed?
- Tesla also had Department of Energy cash participation fee waived, per your own staff in public comment. When all other companies were required to pay the fee, why was Tesla waived?
- According to staff aides, former DOE staff and finance controllers, Rahm Emanual and David Axelrod, while in the White House, "ordered Tesla to be funded even though Tesla was noted as an unsound company by finance consultants to the Government".
- Former DOE staff, and White House aides, have stated that the Tesla "wave through" was a kickback to Tesla's and Googles investors who were massive campaign donors.(Google co-owns Tesla- Hence Google never allows any actual negative news about Tesla on it's servers). Is that true?
- Former NASA staff, and engineers, have stated that they were fired and the exact same portion of NASA shut down, that Tesla's Space X company then immediately took over as an additional kickback to Tesla and Google investors. Those investors: in Tesla, Google, and Space X, are all the same campaign contributors. Was that a campaign financing kick-back?
- You have spent more money to sell less cars than any car company in history? Are you just a money laundering front for campaign cash?
- Have White House staff agreed to protect Tesla, at all costs, in order to keep Mitt Romney's prediction from coming true and to cover campaign billionaires?
- Do your VC investors pump the stock market rating by buying their own Tesla stock when bad news comes out about Tesla in order to create a synthetic cover-story short term stock rise?
- Mr. Musk, we have over 1000 other incriminating facts to ask you about, when may we cover the rest of these questions…?
How Elon Musk’s Investors Manipulate Their Stock Market Valuations via “Pumps”: Crimes?
- Every Time Bad News Comes Out About Tesla, per an 8 year analysis study, Tesla stock suddenly, and mysteriously, jumps up. Investigators find that it just Tesla investors faking the stock ratings by running “Flashboy” automated stock buybacks.
- Fraud charged. “A complete violation of the faith and trust that non-corrupt day traders place in the market” say Senate investigators
SEC Admits It’s Not Monitoring Stock Buybacks to Prevent Market Manipulation
David Dayen
The Securities and Exchange Commission has admitted that it has no ability to enforce the main rule intended to prevent market manipulation when companies buy back their own stock, and has no intention to do so.
SEC Chair Mary Jo White made the acknowledgement in a response to Sen. Tammy Baldwin, D-Wisc., who queried the agency about stock buybacks. Baldwin is one of a growing number of politicians — including presidential candidates Hillary Clinton and Bernie Sanders — who are citing buybacks as an example of deliberate financial engineering that bolsters concentration of wealth and keeps working-class wages stagnant.
Stock buybacks are an increasingly common practice in which corporations take profits, and instead of investing in facilities, research and development, or boosting worker wages, buy shares of their own stock on the open market, thereby boosting demand and driving up its price. Companies bought back over half a trillion dollars’ worth of their own shares last year.
The practice creates short-term rewards for executives who are paid in stock and stock options, and benefit from an increased price. They also make corporate earnings look better by reducing outstanding shares and increasing the commonly reported ratio of earnings-per-share.
Prior to the Reagan era, executives avoided buybacks due to fears that they would be prosecuted for market manipulation. But under SEC Rule 10b-18, adopted in 1982, companies receive a “safe harbor” from market manipulation liability on stock buybacks if they adhere to four limitations: not engaging in buybacks at the beginning or end of the trading day, using a single broker for the trades, purchasing shares at the prevailing market price, and limiting the volume of buybacks to 25 percent of the average daily trading volume over the previous four weeks.
In White’s letter to Baldwin, dated July 13, she admits that the SEC doesn’t collect data that would let it know whether companies breach even these generous limits. “Performing data analyses for issuer stock repurchases presents significant challenges,” White writes, “because detailed trading data regarding repurchases is not currently available.”
Initially, Rule 10b-18 didn’t include any disclosure whatsoever on the part of companies. A 2004 revision requires companies to report monthly buyback totals at the end of each quarter, as part of their 10-Q SEC disclosures. But they do not have to disclose how much they repurchase on a particular day.
“The companies have that information, but the SEC doesn’t collect it,” said William Lazonick, a professor of economics at the University of Massachusetts at Lowell, who has done extensive research on buybacks, and who provided the White letter to The Intercept.
White writes in her letter that the rule is not really a rule at all. Baldwin’s “letter asks for a list of all investigations undertaken by the SEC into possible violations of Rule 10b-18,” White writes, but “because Rule 10b-18 is a voluntary safe harbor, issuers cannot violate this rule.”
“I wouldn’t have thought that she would put it that way, but she said it,” said Lazonick.
White is technically correct, but if the SEC paid any attention to when the corporations left the “safe harbor,” they could then investigate them for market manipulation.
In her agency’s defense, White listed a number of SEC enforcement actions against stock market manipulation, including “pump and dump” schemes, where a company makes false statements to boost its stock price. But none of the four cases White listed involved stock buybacks. In the three decades since Rule 10b-18 has been in effect, investigations into buybacks have been “exceedingly rare,” according to Lazonick.
Rule 10b-18 was shepherded through the SEC by former E.F. Hutton executive John Shad, when he served as SEC chairman. “Shad believed that if you put burdensome reporting requirements on companies it impedes the operation of the capital markets,” Lazonick said. “The rule was a license to manipulate the market.”
In a statement to The Intercept, Sen. Baldwin said, “While I am concerned that the SEC lacks the tools to properly evaluate this issue, I am also disappointed that the SEC’s official response does so little to even acknowledge the stock buyback phenomenon we are seeing in financial markets.”
Last year, companies spent $553 billion to repurchase outstanding shares, just short of the record $589.1 billion in 2007. Large companies like Apple, General Motors, McDonald’s, Pfizer, Microsoft and more have engaged in buybacks in recent years.
Returning profits to shareholders through buybacks and dividends accounted for 95 percent of all earnings in 2014. As a result, each additional dollar of corporate earnings now translates to under 10 cents of reinvestment, according to a study by J.W. Mason of the Roosevelt Institute.
Baldwin tried to attach an amendment to the appropriations bill for financial services agencies requiring the SEC to conduct a study on buybacks, including whether rules like 10b-18 encourage them. But the Republican majority blocked the amendment in the Senate Appropriations Committee on July 23.
In the presidential race, Bernie Sanders called attention to buybacks in anop-ed in the Boston Globe in June, stating, “We must demand an end to stock buybacks.” Hillary Clinton also highlighted the buyback issue in her critiqueof “quarterly capitalism,” vowing to increase disclosure by forcing companies to deliver information on their buybacks within one day.
Lazonick said he doesn’t believe Clinton’s plan goes far enough. “The practice is the problem,” he said, arguing instead for the repeal of Rule 10b-18 and an end to corporations repurchasing their own shares. “More disclosure might start a discussion about what manipulation is, but we’re way beyond that. Why not recognize that this is manipulation, and say this is something we shouldn’t allow?”
Read the letter here:
👁
SEC Response to Baldwin 071320153 pages
CONTACT THE AUTHOR:
David Dayen✉david.dayen@gmail.com
Business
Stock market rigging is no longer a ‘conspiracy theory’
By John Crudele
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Photo: Getty Images
The stock market is rigged.
When I started making that claim years ago — and provided solid evidence — people scoffed. Some called it a conspiracy theory, tinfoil hats and that sort of stuff. Most people just ignored me.
But that’s not happening anymore. The dirty secret is out.
With stock prices rushing far ahead of economic reality over the last six or so years, more experts in the financial markets are coming to the same conclusion — even if they don’t fully understand how it’s being rigged or the consequences.
Ed Yardeni, a longtime Wall Street guru who isn’t one of the clowns of the bunch, said flat out last week that the market was being propped up. “These markets are all rigged, and I don’t say that critically. I just say that factually,” he asserted on CNBC.
Yardeni’s claim is the most basic one: that the Federal Reserve won’t do anything that will upset Wall Street and, in fact, is doing all it can to help the stock market.
But there are other recent claims that come closer to the bull’s-eye, even if the archers don’t quite see what they are hitting.
The Wall Street Journal carried an intriguing story on March 11 about how the Bank of Japan was “aggressively purchasing stock funds.” (The Journal is owned by News Corp., the parent of The Post.)
“By directly underpinning the market, [Bank of Japan] officials have tried to encourage private investors to follow suit and put more money in stocks in the hope of stimulating the economy and increasing inflation,” read the report with a Tokyo dateline.
That’s called rigging the market for a higher purpose, or hoping people who can afford to invest in stocks will make lots of money and spend it. The benefits, Japan’s central bank believes, will then trickle down to the rest of the economy.
The Journal provided lots of details that I won’t get into here. But the paper also presumed that all these central bank stock purchases were being done on the Tokyo market and that only the shares of Japanese companies were being rigged.
That’s not necessarily the case. The Bank of Japan — and other central bankers around the world — could easily be purchasing shares of American companies to help out the US stock market.
And Japan could even be doing it with the blessing of Washington, which is afraid any direct intervention in equities on its part would be discovered by nosy people like me.
Last fall, we learned that one American exchange has made intervention in — rigging — foreign governments easier and cheaper to accomplish. In October, it emerged that CME Group, the Chicago exchange that trades options and commodities, had an incentive program under which foreign central banks could buy stock market derivatives like the Standard & Poor’s futures contracts at a discount.
As I’ve reported many times, S&P futures contracts are the vehicle of choice for rigging the market. They are a cheap and very powerful way to cause an artificial buying frenzy.
After the market’s sizeable drop on Wednesday — the Dow alone lost 292.60 points — be on the lookout today for aggressive S&P futures buying today. It could start in Asia or Europe, but it almost always occurs.
Foreign central banks, of course, really don’t need a discount to buy S&P futures contracts. That’s like billionaires clipping cents-off coupons. But what the CME’s discount tells us is that the Bank of Japan and other central banks are probably already customers.
So the rigging of US stock markets by foreign entities has likely been going on for some time.
Has the US ever directly rigged the stock market? I’m sure it has. The sloppiest attempt seems to have occurred in 2008 during the financial crisis, when Washington was sure our whole financial system was toppling.
Phone logs that I received showed numerous calls between Treasury secretary Hank Paulson and Wall Street banks — Goldman Sachs, in particular — that seemed to coincide nicely with stock market rallies.
Unlike the Bank of Japan, Washington would have been coy about rigging the stock market and probably would have used proxies. The New York Federal Reserve Bank, for instance, would wink and nod at its favorite banks, and trades that turn the stock market upward would suddenly be made.
There’s another kind of market rigging that is also going on. This is being done by companies themselves.
Since corporate profits and revenues aren’t growing enough to justify current high stock prices, companies have been aggressively buying back massive quantities of their own shares.
By doing this, companies reduce the number of their shares owned by the public. This accounting trick boosts the calculation of profit-per-shares because the numerator of the equation (earnings) remains the same while the denominator (outstanding shares) is reduced.
Okay, so the markets are rigged. Basically everyone now agrees on that. But should we care?
America was built on capitalism and free and fair markets. Today’s markets aren’t fair. In fact, they are unfair because they are putting lots of money into the pockets of a small number of Americans.
The bigger problem is this: If stock prices are artificially inflated, nobody can tell what a company is really worth. And banks are going to be hesitant to lend money to companies with fuzzy valuations.
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Filed under federal reserve , goldman sachs , standard & poor’s , stock market , wall street
U.S. stock markets are rigged, says author Michael Lewis NEW YORK | By John McCrank
A Wall Street sign is pictured outside the New York Stock Exchange in New York, October 28, 2013.
Reuters/Carlo Allegri
NEW YORK The U.S. stock market is rigged in favor of high-speed electronic trading firms, which use their advantages to extract billions from investors, according to Michael Lewis, author of a new book on the topic, "Flash Boys: A Wall Street Revolt."
High-frequency trading (HFT) is a practice carried out by many banks and proprietary trading firms using sophisticated computer programs to send gobs of orders into the market, executing a small portion of them when opportunities arise to capitalize on price imbalances, or to make markets. HFT makes up more than half of all U.S. trading volume.
The trading methods and technology that make HFT possible are all legal, and the stock exchanges HFT firms trade on are highly regulated. But Lewis said these firms are using their speed advantage to profit at the expense of other market participants to the tune of tens of billions of dollars.
"They are able to identify your desire to buy shares in Microsoft and buy them in front of you and sell them back to you at a higher price," Lewis, whose book is available on Monday, said on the television program "60 Minutes" on Sunday.
"This speed advantage that the faster traders have is milliseconds, some of it is fractions of milliseconds," said Lewis, whose books include "The Big Short" and "Moneyball."
Those milliseconds can be valuable, making it possible to send around 10,000 orders in the blink of an eye.
Darting in and out of trades, HFT firms make just fractions of a penny per trade, but the sheer speed and volume of their trading activity allows those that are successful to make significant profits.
Proponents of HFT argue that the presence of such firms makes it easier for all market participants to find buyers and sellers for their trades, and that the speed at which HFT firms can detect and take advantage of pricing imbalances between different markets and assets leads to smaller bid-ask spreads.
But Brad Katsuyama, former head trader in New York for the Royal Bank of Canada and a major figure in Lewis's book, said he was finding that when he would send a large stock order to the market, it would only be partially filled, and then he would have to pay a higher price for the rest of the order.
With the help of new hire Ronan Ryan, Katsuyama realized that his orders traveled along fiber optic lines and hit the closest exchange first, where high frequency traders would get a glimpse, and then use their speed advantage to beat him to the other 12 U.S. public exchanges and 45 private trading venues. HFT algorithms could then buy the shares Katsuyama wanted, and then sell them to him at a slightly higher price.
Katsuyama and Ryan created a system in which RBC would send its orders first to the exchange that was the furthest away, and last to the exchange that was closest, with the goal of arriving at all places nearly simultaneously, cutting out HFT.
"Essentially, our fill rates went to 100 percent. We couldn't believe it when we actually figured it out," Katsuyama told "60 Minutes."
Katsuyama said he decided to start a new trading platform, called IEX, for the Investors' Exchange, employing similar tactics to those he used at RBC.
"It almost felt like a sense of obligation to say we found a problem that is affecting millions and millions of people - people are blindly losing money they didn't even know they were entitled to. It's a hole in the bottom of the bucket," he said.
IEX has attracted the investment of David Einhorn, the billionaire owner of hedge fund Greenlight Capital, and an endorsement from Goldman Sachs. The investors in IEX are fund companies and individuals, not banks.
"We are selling trust, we are selling transparency, and to think that trust is actually a differentiator in a service business, is actually a crazy thought, right?" said Katsuyama.
Earlier this month, New York state's Attorney General Eric Schneiderman said he believes U.S. stock exchanges and other platforms provide HFT firms with unfair advantages.
Exchanges allow trading firms to place computer servers inside the exchange's data centers so that the firms can see the data as soon as possible. The practice, called co-location, is regulated and available to anyone who wants to pay for it.
Schneiderman has begun meeting with the U.S. exchanges, which include IntercontinentalExchange Group's New York Stock Exchange, Nasdaq OMX Group's main bourse, and four platforms run by BATS Global Markets, on possible reforms, a source close to the situation told Reuters.
A ban on HFT is unlikely, as U.S. regulators would be loath to put policies in place that could lead to a less liquid market, Robert Greifeld, chief executive officer of Nasdaq, said on Thursday.
(Reporting by John McCrank; Editing by Diane Craft)
- Every Time Bad News Comes Out About Tesla, per an 8 year analysis study, Tesla stock suddenly, and mysteriously, jumps up. Investigators find that it just Tesla investors faking the stock ratings by running “Flashboy” automated stock buybacks.
- Fraud charged. “A complete violation of the faith and trust that non-corrupt day traders place in the market” say Senate investigators
SEC Admits It’s Not Monitoring Stock Buybacks to Prevent Market Manipulation
David Dayen
The Securities and Exchange Commission has admitted that it has no ability to enforce the main rule intended to prevent market manipulation when companies buy back their own stock, and has no intention to do so.
SEC Chair Mary Jo White made the acknowledgement in a response to Sen. Tammy Baldwin, D-Wisc., who queried the agency about stock buybacks. Baldwin is one of a growing number of politicians — including presidential candidates Hillary Clinton and Bernie Sanders — who are citing buybacks as an example of deliberate financial engineering that bolsters concentration of wealth and keeps working-class wages stagnant.
Stock buybacks are an increasingly common practice in which corporations take profits, and instead of investing in facilities, research and development, or boosting worker wages, buy shares of their own stock on the open market, thereby boosting demand and driving up its price. Companies bought back over half a trillion dollars’ worth of their own shares last year.
The practice creates short-term rewards for executives who are paid in stock and stock options, and benefit from an increased price. They also make corporate earnings look better by reducing outstanding shares and increasing the commonly reported ratio of earnings-per-share.
Prior to the Reagan era, executives avoided buybacks due to fears that they would be prosecuted for market manipulation. But under SEC Rule 10b-18, adopted in 1982, companies receive a “safe harbor” from market manipulation liability on stock buybacks if they adhere to four limitations: not engaging in buybacks at the beginning or end of the trading day, using a single broker for the trades, purchasing shares at the prevailing market price, and limiting the volume of buybacks to 25 percent of the average daily trading volume over the previous four weeks.
In White’s letter to Baldwin, dated July 13, she admits that the SEC doesn’t collect data that would let it know whether companies breach even these generous limits. “Performing data analyses for issuer stock repurchases presents significant challenges,” White writes, “because detailed trading data regarding repurchases is not currently available.”
Initially, Rule 10b-18 didn’t include any disclosure whatsoever on the part of companies. A 2004 revision requires companies to report monthly buyback totals at the end of each quarter, as part of their 10-Q SEC disclosures. But they do not have to disclose how much they repurchase on a particular day.
“The companies have that information, but the SEC doesn’t collect it,” said William Lazonick, a professor of economics at the University of Massachusetts at Lowell, who has done extensive research on buybacks, and who provided the White letter to The Intercept.
White writes in her letter that the rule is not really a rule at all. Baldwin’s “letter asks for a list of all investigations undertaken by the SEC into possible violations of Rule 10b-18,” White writes, but “because Rule 10b-18 is a voluntary safe harbor, issuers cannot violate this rule.”
“I wouldn’t have thought that she would put it that way, but she said it,” said Lazonick.
White is technically correct, but if the SEC paid any attention to when the corporations left the “safe harbor,” they could then investigate them for market manipulation.
In her agency’s defense, White listed a number of SEC enforcement actions against stock market manipulation, including “pump and dump” schemes, where a company makes false statements to boost its stock price. But none of the four cases White listed involved stock buybacks. In the three decades since Rule 10b-18 has been in effect, investigations into buybacks have been “exceedingly rare,” according to Lazonick.
Rule 10b-18 was shepherded through the SEC by former E.F. Hutton executive John Shad, when he served as SEC chairman. “Shad believed that if you put burdensome reporting requirements on companies it impedes the operation of the capital markets,” Lazonick said. “The rule was a license to manipulate the market.”
In a statement to The Intercept, Sen. Baldwin said, “While I am concerned that the SEC lacks the tools to properly evaluate this issue, I am also disappointed that the SEC’s official response does so little to even acknowledge the stock buyback phenomenon we are seeing in financial markets.”
Last year, companies spent $553 billion to repurchase outstanding shares, just short of the record $589.1 billion in 2007. Large companies like Apple, General Motors, McDonald’s, Pfizer, Microsoft and more have engaged in buybacks in recent years.
Returning profits to shareholders through buybacks and dividends accounted for 95 percent of all earnings in 2014. As a result, each additional dollar of corporate earnings now translates to under 10 cents of reinvestment, according to a study by J.W. Mason of the Roosevelt Institute.
Baldwin tried to attach an amendment to the appropriations bill for financial services agencies requiring the SEC to conduct a study on buybacks, including whether rules like 10b-18 encourage them. But the Republican majority blocked the amendment in the Senate Appropriations Committee on July 23.
In the presidential race, Bernie Sanders called attention to buybacks in anop-ed in the Boston Globe in June, stating, “We must demand an end to stock buybacks.” Hillary Clinton also highlighted the buyback issue in her critiqueof “quarterly capitalism,” vowing to increase disclosure by forcing companies to deliver information on their buybacks within one day.
Lazonick said he doesn’t believe Clinton’s plan goes far enough. “The practice is the problem,” he said, arguing instead for the repeal of Rule 10b-18 and an end to corporations repurchasing their own shares. “More disclosure might start a discussion about what manipulation is, but we’re way beyond that. Why not recognize that this is manipulation, and say this is something we shouldn’t allow?”
Read the letter here:
👁
SEC Response to Baldwin 071320153 pages
CONTACT THE AUTHOR:
David Dayen✉david.dayen@gmail.com
Business
Stock market rigging is no longer a ‘conspiracy theory’
By John Crudele
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The stock market is rigged.
When I started making that claim years ago — and provided solid evidence — people scoffed. Some called it a conspiracy theory, tinfoil hats and that sort of stuff. Most people just ignored me.
But that’s not happening anymore. The dirty secret is out.
With stock prices rushing far ahead of economic reality over the last six or so years, more experts in the financial markets are coming to the same conclusion — even if they don’t fully understand how it’s being rigged or the consequences.
Ed Yardeni, a longtime Wall Street guru who isn’t one of the clowns of the bunch, said flat out last week that the market was being propped up. “These markets are all rigged, and I don’t say that critically. I just say that factually,” he asserted on CNBC.
Yardeni’s claim is the most basic one: that the Federal Reserve won’t do anything that will upset Wall Street and, in fact, is doing all it can to help the stock market.
But there are other recent claims that come closer to the bull’s-eye, even if the archers don’t quite see what they are hitting.
The Wall Street Journal carried an intriguing story on March 11 about how the Bank of Japan was “aggressively purchasing stock funds.” (The Journal is owned by News Corp., the parent of The Post.)
“By directly underpinning the market, [Bank of Japan] officials have tried to encourage private investors to follow suit and put more money in stocks in the hope of stimulating the economy and increasing inflation,” read the report with a Tokyo dateline.
That’s called rigging the market for a higher purpose, or hoping people who can afford to invest in stocks will make lots of money and spend it. The benefits, Japan’s central bank believes, will then trickle down to the rest of the economy.
The Journal provided lots of details that I won’t get into here. But the paper also presumed that all these central bank stock purchases were being done on the Tokyo market and that only the shares of Japanese companies were being rigged.
That’s not necessarily the case. The Bank of Japan — and other central bankers around the world — could easily be purchasing shares of American companies to help out the US stock market.
And Japan could even be doing it with the blessing of Washington, which is afraid any direct intervention in equities on its part would be discovered by nosy people like me.
Last fall, we learned that one American exchange has made intervention in — rigging — foreign governments easier and cheaper to accomplish. In October, it emerged that CME Group, the Chicago exchange that trades options and commodities, had an incentive program under which foreign central banks could buy stock market derivatives like the Standard & Poor’s futures contracts at a discount.
As I’ve reported many times, S&P futures contracts are the vehicle of choice for rigging the market. They are a cheap and very powerful way to cause an artificial buying frenzy.
After the market’s sizeable drop on Wednesday — the Dow alone lost 292.60 points — be on the lookout today for aggressive S&P futures buying today. It could start in Asia or Europe, but it almost always occurs.
Foreign central banks, of course, really don’t need a discount to buy S&P futures contracts. That’s like billionaires clipping cents-off coupons. But what the CME’s discount tells us is that the Bank of Japan and other central banks are probably already customers.
So the rigging of US stock markets by foreign entities has likely been going on for some time.
Has the US ever directly rigged the stock market? I’m sure it has. The sloppiest attempt seems to have occurred in 2008 during the financial crisis, when Washington was sure our whole financial system was toppling.
Phone logs that I received showed numerous calls between Treasury secretary Hank Paulson and Wall Street banks — Goldman Sachs, in particular — that seemed to coincide nicely with stock market rallies.
Unlike the Bank of Japan, Washington would have been coy about rigging the stock market and probably would have used proxies. The New York Federal Reserve Bank, for instance, would wink and nod at its favorite banks, and trades that turn the stock market upward would suddenly be made.
There’s another kind of market rigging that is also going on. This is being done by companies themselves.
Since corporate profits and revenues aren’t growing enough to justify current high stock prices, companies have been aggressively buying back massive quantities of their own shares.
By doing this, companies reduce the number of their shares owned by the public. This accounting trick boosts the calculation of profit-per-shares because the numerator of the equation (earnings) remains the same while the denominator (outstanding shares) is reduced.
Okay, so the markets are rigged. Basically everyone now agrees on that. But should we care?
America was built on capitalism and free and fair markets. Today’s markets aren’t fair. In fact, they are unfair because they are putting lots of money into the pockets of a small number of Americans.
The bigger problem is this: If stock prices are artificially inflated, nobody can tell what a company is really worth. And banks are going to be hesitant to lend money to companies with fuzzy valuations.
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Filed under federal reserve , goldman sachs , standard & poor’s , stock market , wall street
U.S. stock markets are rigged, says author Michael Lewis NEW YORK | By John McCrank
A Wall Street sign is pictured outside the New York Stock Exchange in New York, October 28, 2013.
Reuters/Carlo Allegri
NEW YORK The U.S. stock market is rigged in favor of high-speed electronic trading firms, which use their advantages to extract billions from investors, according to Michael Lewis, author of a new book on the topic, "Flash Boys: A Wall Street Revolt."
High-frequency trading (HFT) is a practice carried out by many banks and proprietary trading firms using sophisticated computer programs to send gobs of orders into the market, executing a small portion of them when opportunities arise to capitalize on price imbalances, or to make markets. HFT makes up more than half of all U.S. trading volume.
The trading methods and technology that make HFT possible are all legal, and the stock exchanges HFT firms trade on are highly regulated. But Lewis said these firms are using their speed advantage to profit at the expense of other market participants to the tune of tens of billions of dollars.
"They are able to identify your desire to buy shares in Microsoft and buy them in front of you and sell them back to you at a higher price," Lewis, whose book is available on Monday, said on the television program "60 Minutes" on Sunday.
"This speed advantage that the faster traders have is milliseconds, some of it is fractions of milliseconds," said Lewis, whose books include "The Big Short" and "Moneyball."
Those milliseconds can be valuable, making it possible to send around 10,000 orders in the blink of an eye.
Darting in and out of trades, HFT firms make just fractions of a penny per trade, but the sheer speed and volume of their trading activity allows those that are successful to make significant profits.
Proponents of HFT argue that the presence of such firms makes it easier for all market participants to find buyers and sellers for their trades, and that the speed at which HFT firms can detect and take advantage of pricing imbalances between different markets and assets leads to smaller bid-ask spreads.
But Brad Katsuyama, former head trader in New York for the Royal Bank of Canada and a major figure in Lewis's book, said he was finding that when he would send a large stock order to the market, it would only be partially filled, and then he would have to pay a higher price for the rest of the order.
With the help of new hire Ronan Ryan, Katsuyama realized that his orders traveled along fiber optic lines and hit the closest exchange first, where high frequency traders would get a glimpse, and then use their speed advantage to beat him to the other 12 U.S. public exchanges and 45 private trading venues. HFT algorithms could then buy the shares Katsuyama wanted, and then sell them to him at a slightly higher price.
Katsuyama and Ryan created a system in which RBC would send its orders first to the exchange that was the furthest away, and last to the exchange that was closest, with the goal of arriving at all places nearly simultaneously, cutting out HFT.
"Essentially, our fill rates went to 100 percent. We couldn't believe it when we actually figured it out," Katsuyama told "60 Minutes."
Katsuyama said he decided to start a new trading platform, called IEX, for the Investors' Exchange, employing similar tactics to those he used at RBC.
"It almost felt like a sense of obligation to say we found a problem that is affecting millions and millions of people - people are blindly losing money they didn't even know they were entitled to. It's a hole in the bottom of the bucket," he said.
IEX has attracted the investment of David Einhorn, the billionaire owner of hedge fund Greenlight Capital, and an endorsement from Goldman Sachs. The investors in IEX are fund companies and individuals, not banks.
"We are selling trust, we are selling transparency, and to think that trust is actually a differentiator in a service business, is actually a crazy thought, right?" said Katsuyama.
Earlier this month, New York state's Attorney General Eric Schneiderman said he believes U.S. stock exchanges and other platforms provide HFT firms with unfair advantages.
Exchanges allow trading firms to place computer servers inside the exchange's data centers so that the firms can see the data as soon as possible. The practice, called co-location, is regulated and available to anyone who wants to pay for it.
Schneiderman has begun meeting with the U.S. exchanges, which include IntercontinentalExchange Group's New York Stock Exchange, Nasdaq OMX Group's main bourse, and four platforms run by BATS Global Markets, on possible reforms, a source close to the situation told Reuters.
A ban on HFT is unlikely, as U.S. regulators would be loath to put policies in place that could lead to a less liquid market, Robert Greifeld, chief executive officer of Nasdaq, said on Thursday.
(Reporting by John McCrank; Editing by Diane Craft)