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Is Goldman Stealing $100 Million per Trading Day?

Posted By Barry Ritholtz On July 9, 2009 @ 6:02 am In Legal,Quantitative,Trading | Comments Disabled

Here’s something to give the conspiracy buffs a total breakdown: Combine these stories from Bloomberg [1], Daily Kos [2], and Zero Hedge [3], and you can reach a rather unsavory conclusion:

•  Goldman Sachs’s $100 Million Trading Days Hit Record [4]

FBI Arrest Opens Goldman-Sachs’ Pandora’s Box [5]

Intraday Observations [6]

“Incredibly Shrinking Liquidity” as Goldman Flushed Quant Trading [7]

What is the inference of potentially illegality here?

“That Goldman Sachs may just possibly have used security access codes and built a system to acquire trading information PRIOR to transaction commit time points at NYSE.

The profitability of this split-second information advantage would have been and could have been extraordinary. Observed yielding profits at $100,000,000 a day. [summary to address complaints with respect to complexity.]

GS has special access inside the system from its status assisting the Working Group on Financial Markets (colloquially the Plunge Protection Team) created by Presidential Order two decades ago. GC also acts as Special Liquidity Provider for NYSE.

With 60% dominance of NYSE program trading, what’s good for Goldman defines what shows as overall market performance.”

There is likely to be more info about this trickling out over the coming days and weeks. Stay tuned . . .

>

Hat tip Bill King

Sources:
Goldman Sachs’s $100 Million Trading Days Hit Record [4]
Christine Harper
Bloomber, May 6

http://www.bloomberg.com/apps/news?pid=20601087&sid=a7HGVAn8w73Y&

FBI Arrest Opens Goldman-Sachs’ Pandora’s Box [5]
bobswern
Daily Kos, Jul 06, 2009

http://www.dailykos.com/story/2009/7/6/750420/-Breaking:-FBI-Arrest-Opens-Goldman-Sachs-Pandoras-Box

Intraday Observations [6]
Tyler Durden
Zero Hedge, JULY 8, 2009

http://zerohedge.blogspot.com/2009/07/intraday-observations.html

“Incredibly Shrinking Liquidity” as Goldman Flushed Quant Trading [7]
vets74
Daily Kos, Jul 07, 2009

http://www.dailykos.com/storyonly/2009/7/7/750786/-Incredibly-Shrinking-Liquidity-as-Goldman-Flushed-Quant-Trading


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2009/07/is-goldman-stealing-100-million-per-trading-day/

URLs in this post:

[1] Bloomberg: http://www.bloomberg.com/

[2] Daily Kos: http://www.dailykos.com/

[3] Zero Hedge: http://zerohedge.blogspot.com/

[4] Goldman Sachs’s $100 Million Trading Days Hit Record: http://www.bloomberg.com/apps/news?pid=20601087&sid=a7HGVAn8w73Y&

[5] FBI Arrest Opens Goldman-Sachs’ Pandora’s Box: http://www.dailykos.com/story/2009/7/6/750420/-Breaking:-FBI-Arrest-Opens-Goldman-Sachs-Pandoras-Box

[6] Intraday Observations: http://zerohedge.blogspot.com/2009/07/intraday-observations.html

[7] “Incredibly Shrinking Liquidity” as Goldman Flushed Quant Trading: http://www.dailykos.com/storyonly/2009/7/7/750786/-Incredibly-Shrinking-Liquidity-as-Goldman-Flushed-Quant-Trading

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