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Author Topic: Stock Market Manipulation
Babbler # 490

posted 30 April 2003 09:07 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
Check it out.

It's quite a fascinating article. The reporter cleverly shows how the SEC managed to screw up (A) because of an institutional culture that, perforce, treats the stock market as a valuable thing to be preserved so that the average person has "faith" in the US economy, and (B) because of a clear lack of computer literacy among its investigators and officials.

Arthur Levitt, for all his good works such as Regulation FD, clearly fell down on the job this time.

I turn now to the 15-year-old boy. He clearly has a cynical, if all-too-realistic, understanding of the true driving force of the stock market:

"People who trade stocks, trade based on what they feel will move and they can trade for profit. Nobody makes investment decisions based on reading financial filings. Whether a company is making millions or losing millions, it has no impact on the price of the stock. Whether it is analysts, brokers, advisors, Internet traders, or the companies, everybody is manipulating the market. If it wasn't for everybody manipulating the market, there wouldn't be a stock market at all. . . ."

Anybody who's read Jim Stanford's Paper Boom or seen me voluminiously fulminate against the gossamer paper economy would be hard-pressed to find fault with the above quote direct from Jonathan Lebed.

Yet the boy's basic attitude concerns me mightily.

It's not clear that, legally, he's done anything wrong. But he's absorbed the attitude so prevalent in today's society, a "deeply unethical society" in Frank Abagnale's words, that if the money's green, nobody will care how you got it.

(It's all too true. How many of you have tried the experiment of paying for something with a credit card and making your signature look weird and seeing how many people actually check the back of the card to see if it matches? My informal check leads me to conclude that nearly zero percent of people flip your credit card over to look and check that your signature matches the one on the back. And these days, automated paying systems at gas stations, etc. make it even easier to commit fraud. Steal someone's credit card, pull up to a gas station, swipe it in the auto-reader and the pump electronically authorizes your gas purchase without you even going inside to pay for anything.)

Having digressed a bit, I would say that this article is really a moral and cautionary tale.

It is a story of parental incomprehension at their child's actions. It is a story of a child who has all-too-well internalized the attitudes held by adults who pretend they don't contribute to the corrosion of trust in today's society. It is a story of authorities who reach for facile explanations to cover their lack of knowledge of the skills utilized by the stock inflater.

It also cautions us about two things: (A) those "in authority" can be just as clueless as anybody else sometimes, and (B) "white collar crime" continues to be as poorly handled as ever. So hang onto your wallet.

From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged

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