The Securities and Exchange Commission is planning to institute trading curbs on major exchanges and individual stocks starting in mid June. The proposal is for "circuit breakers" to kick in when the market drops 5% between the hours of 9:45 a.m. and 3:35 p.m.
Why are these proposals inadequate? First, Gary Gensler of the Commodity Futures Trading Commission testified that it was the sale of 75,000 e-mini S&P contracts by Waddell and Reed that started the sell off. This kicked off high-speed computers by big banks and traders all over the country. Within 20 minutes, the trading in just this one contract swelled to over 840,000 contracts, plunging the Dow down 998 points, or nearly $1 trillion dollars.
Continue reading Proposed Trading Curbs Are Inadequate for 21st Century Trading
Continuing from where I left off earlier today regarding the Goldman Sachs - Paulson & Company debacle...
What would have happened if the collateralized debt obligations were created and sold exactly as was done, shorted by Paulson, and the eventual buyer was Warren Buffett?
First of all, "my pal Warren"
would not let his position be known to anyone beyond normal filing requirements and perhaps announced at some later date. Second, if it was disclosed that Buffett was betting against Paulson, Mr Paulson would be a huge fool if he did not think twice about his shorting the CDO given this new piece of information. Third, should the buyers of the actual CDO be treated differently than Buffett, or you or me? Of course not.
If I were CEO Blankfein, that is what I would have tossed back at Congress.
Continue reading Congress, SEC and Goldman Sachs Failures -- Part 2
Today wasn't about an Obama Supreme Court nominee, nor was it about reform or other legislation in the center of the known world (America). Today was simply about an E.U. and IMF coordinated E.U. bailout package measuring close to $1 trillion.
Cautious housing survey data about homeowners being buried further in their houses did little to harm the markets. In fact, this was one of the days where you ended up feeling bad if each of your stock picks wasn't up 4% or more.
Here were the unofficial closing bell levels from today's massive day:
Dow 10,785.74 +405.31 (3.90%)
S&P 500 1,159.68 +48.80 (4.39%)
Nasdaq 2,374.67 +109.03 (4.81%)
Top Analyst Calls
Continue reading Closing Bell: Market Bounces Back with a Vengeance (AIB, MCO, NBG, GS, PLD)
Goldman Sachs Group Inc.
) may be in settlement talks
with the Securities and Exchange Commission, according to a report in the Wall Street Journal.
As it now stands, both sides are far apart.
Goldman is being pressured on several fronts and shareholders are losing money. Goldman stock has dropped more than 20% since the start of the SEC civil charges and a shareholder meeting is scheduled for Friday. Goldman directors are expected to discuss revisions in some of the company's practices.
Continue reading Goldman Sachs in Settlement Talks with the SEC
It's been great theater. Goldman Sachs (GS) executives appeared before Congress and staunchly denied any wrongdoing.
Now Goldman is expected to file a motion with the SEC to dismiss the action. This would set in motion the grounds for a negotiated settlement.
Before the congressional committee, CEO Lloyd Blankfein was aggressive and outspoken in defending his and the bank's actions. He said: "I heard nothing today that makes me think anything went wrong."
Continue reading Will Goldman Sachs and the SEC Arrive at a Settlement?
3.2% GDP probably sounds a lot lot better than anything recessionary, but that was a tad under economic projections. The good news is that the inflationary component remained weak enough that it is harder to argue against the FOMC's no-to-low rate policy. The markets had a hard time getting into positive territory, and showed it was impossible to remain there.
Here were today's unofficial closing bell levels:
Dow 11,008.61 -158.71 (-1.42%)
Nasdaq 2,461.19 -50.73 (-2.02%)
S&P 500 1,186.68 -20.10 (-1.67%)
Continue reading Closing Bell: Headwinds More Dominant Than GDP (DHI, NDAQ, GS, MFE)
It is an unfortunate thing that we live in a world where you are guilty until proven innocent in far too many cases. This is the burden that Goldman Sachs (GS
) faces as it has been convicted in the court of public opinion. Not only has it been convicted, but the public does not actually care whether it is guilty or not. The public feels Goldman has done the nation wrong and must pay.
On Tuesday, Lloyd Blankfein, CEO of Goldman Sachs, is testifying in front of the Senate Permanent Subcommittee on Investigations
. He will try to put his best foot forward, and hopefully it will not end up in his mouth. Blankfein may be top dog at the company, but he would do himself a big favor if he stays cool, calm and collected -- and maybe before the day is up someone will throw him a bone.
The public may want Goldman Sachs to pay, but how much should you pay for the stock under these circumstances?
Continue reading Serious Money: Goldman Sachs Shares Dirt Cheap
After years of fumbling the ball, the Securities and Exchange Commission put on a new hat and is playing hardball in the Goldman Sachs (GS
Mark Radke, a former SEC official, told Bloomberg
that what the lawsuit says is that the SEC is willing "to file big cases ... against the biggest firms, and ... about the most complicated stuff."
The SEC has a new "enforcer," Robert Khuzami. Khuzami took on the biggest kid on the block. His motive may be twofold. First he must show Americans that something is being done to punish Wall Street. Second, given a win with Goldman, the other Wall Street firms will quickly fall in line.
Continue reading SEC's New Approach: We're Playing Hardball
This was one of those trading days where you had to toss a coin for a good guess about where markets were headed until after 2 PM. Ongoing concerns over Goldman Sachs, Greece, and even the Iceland Volcano were adding to the pressure in early morning trading. Even stronger than expected Leading Economic Indicators reading did not help out later in the day.
Here were the unofficial closing bell levels:
Nasdaq 2,480.11 -1.15 (-0.05%)
Dow 11,092.05 +73.39 (0.67%)
S&P 500 1,197.52 +5.39 (0.45%)
Top Analyst Calls
Continue reading Closing Bell: Maybe Just a One-Day Scandal? (C, PALM, S, CADX, GS)
My, my, what a tangled web we weave, when first we practice...
It seems Goldman Sachs Group (GS
), now charged with fraud
by the Security and Exchange Commission, was doing more than practicing. Apparently its business practices leave much in question about its ethical practices and how far it would go to make a deal. In particular, failing to disclose what the SEC deems material facts that may have altered an investor's decision to buy a collateral debt obligations in the form of a Residential Mortgage Backed Security (RMBS).
One might think an experienced investor would have been suspicious from the onset about any security that actually included the letters "BS" in its title and that this would have been adequate disclosure.
Continue reading Serious Money: Goldman Sachs Is All the Rage
Today looked like a soft day for the market based on some added overseas concerns. Then on top of that came the Goldman Sachs charge from the SEC over civil fraud charges about its role in some mortgage derivative products. Financials were the worst hit today, but most sectors took a breather. Today was an excuse to take profits AND an opportunity for the bears to try to get back in the game.
Here were today's unofficial closing bell levels:
Dow 11,018.66 -125.91 (-1.13%)
S&P 500 1,192.13 -19.54 (-1.61%)
Nasdaq 2,481.26 -34.43 (-1.37%)
Major Analyst Calls
Continue reading Closing Bell: Goldman Sachs Kills the Market (GS, GE, BAC, PFWD, ORCL, AU)
Goldman Sachs (GS) is recently down $24.39 to $160. The SEC charged Goldman Sachs with fraud relating to CDO's. GS is expected to announce Q1 EPS on April 20. Call option volume of 74,498 contracts compares to put volume of 77,029 contracts. May put option implied volatility of 50 is above a level of 27 from April 13 and above its 26-week average of 32 according to Track Data, suggesting larger price movement.
CBOE Volatility Index-VIX up 2.96 to 18.85.
Update is by Stock Specialist Paul Foster of theflyonthewall.com
Facebook is putting the brakes on early employee stock sales. The social media
company implemented a new policy last Friday, claiming that the prohibition on trading the company's pre-IPO
shares is intended to keep employees out of legal trouble, reports Inside Facebook
This may come as an unfortunate development to employees eager to get a taste of publicly traded riches in advances, as Facebook
's shares have been shooting higher in the secondary markets where they can be traded.
Continue reading Facebook to Block Pre-IPO Trading
One of the most common arguments made in defense of the Securities and Exchange Commission's handling of the financial crisis is that the agency is understaffed, and doesn't pay its people well enough to attract talent that can compete with the private sector.
Either that, or SEC employees just need to spend more time finding the next Bernie Madoff and less time looking at naked pictures on the Internet.
Continue reading SEC Workers Love That Internet Porn
The Committee to Enhance Denny's Corporation (DENN
), which is a group created by investors Oak Street Capital Management, and Dash Acquisitions, has filed a preliminary proxy statement that marks the beginning of an effort to shake up the company's board of directors -- and increase shareholder value.
The proxy statement filed with SEC calls out the company's management, board of directors, track record, executive compensation, and overall failure as evidenced by the company's poor share price.
Continue reading Denny's Shareholder Files Preliminary Proxy Statement
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