Malicious Traders Try To Topple British Bank

[the-analyst2007]

Malicious Traders Try To Topple British Bank

Most of tomorrow's British papers are leading with the story of how traders in London, who held short positions in HBOS, began to spread wild rumours this morning that the bank had to resort to emergency funds from the Bank of England. There was consequently a dramatic fall in HBOS shares (down 20% at one point) with the traders profiting from their short positions.

According to Sky News:

The City watchdog (FSA) has launched an inquiry into potential stock market abuse after claims traders have been profiting from spreading false rumours.

Financial Services Authority warned it would not tolerate traders making up stories and dealing off the back of them in the current market turmoil.

Halifax Bank of Scotland has reportedly been at the centre of the rumours after its shares plunged amid speculation of funding problems.

http://news.sky.com/skynews/article/0,, ... 97,00.html

So these boyos would try and bring down a Bank to make a quick buck!

[Coles]

Hopefully the Financial Services Authority will also investigate the continuing misleading of investors by financial institutions that falsely claim that they are not exposed to liquidity problems.

[patslatt]

Hopefully the Financial Services Authority will also investigate the continuing misleading of investors by financial institutions that falsely claim that they are not exposed to liquidity problems.

You aren't shorting HBOS,of course!

[Oblivion]

Good on them I say - they played the system and made an absolute fortune in minutes. Did they break the law? Maybe, technically they stretched the rules but speculation is is part of free speech.

Switch on your TV and go to Bloomberg or CNBC etc. What are they doing virtually every minute of every hour? Answer: SPECULATING!

This is absolutely nothing new - rumours and subtle messages have been used to manipulate markets since the dawn of time.

The difference this time? The big players lost money and they're seriously p*ssed. Full stop. They sh*t in their pants when they saw a major bank might sink without trace in minutes. So, now that the big boys have been burned, they b*tch wine about "corruption". Now suddenly, they conveniently want an "investigation" into this "hideous fruad" - even though for years on end these reptiles have made huge profits from exactly the same system.

Moral high ground? I don't f*cking think so.

[Akrasia]

I think any financial system that allows 'shorting' in the first place is just asking for trouble.

Its not investment, it's gambling and even worse than regular speculation, it's gambling on failure and not investing in jobs or research (or whatever the current justification for stock markets are)

[Akrasia]

Good on them I say - they played the system and made an absolute fortune in minutes. Did they break the law? Maybe, technically they stretched the rules but speculation is is part of free speech.

No its not. What are you talking about?

Free speech is a high principle, a fundamental human right, a necessary instrument to prevent despotism and totalitarianism.

The right to lie is absolutely not a part of free speech, and the right to deceive people for your own profit is an anathema to free speech.

Switch on your TV and go to Bloomberg or CNBC etc. What are they doing virtually every minute of every hour? Answer: SPECULATING!

There is a difference between honest speculation, and fraud. There is a difference between trying to inform the public, and lining your own pockets (i'm not saying that CNBC and Bloomberg are completely innocent or always honest, doubtless they have their own agenda)

This is absolutely nothing new - rumours and subtle messages have been used to manipulate markets since the dawn of time.

And when they're deliberately lying, they've been fraud since the dawn of time.

The difference this time? The big players lost money and they're seriously p*ssed. Full stop. They sh*t in their pants when they saw a major bank might sink without trace in minutes. So, now that the big boys have been burned, they b*tch wine about "corruption". Now suddenly, they conveniently want an "investigation" into this "hideous fruad" - even though for years on end these reptiles have made huge profits from exactly the same system.

Moral high ground? I don't f*cking think so.

I think the real difference this time, is that the banks are trying to spread a fraudulent message themselves (that everything's ok). They're following the machiavellian strategy that the best form of defence is attack, so they're defending their reputation by attacking the media. Its quite simple really.

All deliberate deception is a crime, it's called fraud. I have no doubt that there are lots of traders who would love to influence markets in their favour, i only doubt their capacity to do so. The big banks however have more than enough motive and opportunity to wage their current propaganda war

[Squire Allworthy]

I think any financial system that allows 'shorting' in the first place is just asking for trouble.

Its not investment, it's gambling and even worse than regular speculation, it's gambling on failure and not investing in jobs or research (or whatever the current justification for stock markets are)

How very true.

[Akrasia]

I think any financial system that allows 'shorting' in the first place is just asking for trouble.

Its not investment, it's gambling and even worse than regular speculation, it's gambling on failure and not investing in jobs or research (or whatever the current justification for stock markets are)

How very true.

even worse, shorting relies on a few 'smart' people gambling that the majority of institutional investors are wrong. If shorting is ever a consistently profitable exercise, it means the majority of high rolling investors haven't got a clue what they're doing.

[Libero]

Hopefully the Financial Services Authority will also investigate the continuing misleading of investors by financial institutions that falsely claim that they are not exposed to liquidity problems.

In fairness, if a bank has rumblings of liquidity/funding problems, and if it then admits this, it is guaranteed serious problems in that area, even terminal ones. This is especially true in nervous, jittery times in funding markets.

This was recognised as far back as the days of Walter Bagehot.

[Libero]

I think any financial system that allows 'shorting' in the first place is just asking for trouble.

Its not investment, it's gambling and even worse than regular speculation, it's gambling on failure and not investing in jobs or research (or whatever the current justification for stock markets are)

How very true.

even worse, shorting relies on a few 'smart' people gambling that the majority of institutional investors are wrong. If shorting is ever a consistently profitable exercise, it means the majority of high rolling investors haven't got a clue what they're doing.

Nonsense. Short selling is an integral part of having a fairly-priced, efficient market.