Attempts To Manipulate Stock Prices - Countermeasu
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Posted On: 02/10/2019 12:09:39 PM
Attempts To Manipulate Stock Prices - Countermeasures / Enforcement.
As long-term followers will know, manipulation attempts by scammers - mostly operating on iHub - to dupe people to sell on the bid - are a daily occurrence on multiple stocks at a time.
The well-known suspects usually target stocks with a thin share structure, a wide spread, those that have seen a significant gain in pps - either through recent high volume or reverse split - or a period of relative inactivity whilst reorganizing.
The scammers often make a "drive-by" sweep of several stocks making nonsense comments in the hours well after the close weekdays or at weekends in an attempt to create an illusion. Just check on some of the usual suspects on iHub by clicking on their username and see where they have posted.
The tactics used usually involve a combination of:
- Deliberately selling small amounts into the bid to give the illusion that others might also sell - sometimes by shorting.
- Disinformation - such as throwing out one liners like "scam" - "dead" - "shares to be dumped" - "dilution" - even when more credible posters have already demonstrated that is not the case and maintained a continuous history of company progress and trading analysis.
- Attempting to make personal attacks on positive posters.
- Two or more bashers working together and agreeing with each other's posts - particularly on amateur forums where most top traders can't be bothered to debunk the nonsense.
The above activities can be considered as "conspiracy to affect the price of a stock" which is a felony. In addition, many of the comments made about companies or their executives constitute defamation and / or internet harassment.
Recently, several top, high-volume traders have noticed increases in commission charges when they are the buyers of the "small volume" paint downs by the bashers - sometimes accruing charges on every day there is a paint down during the 60-day period of the GTC order where they are trying to prevent the bashers reloading.
The FINRA Regulations Compliance Departments of brokers are now specifically on the lookout for paint downs and other "trades for little benefit" and a variety of measures have recently been introduced by at least one of the main brokers:
- It is no longer possible for an individual to place a sell order at the same price he/she has a buy order at (but of course the basher's buy order could be lower so that gives a clue where to keep outbidding him for those who want to).
- It is no longer possible for an individual to place a buy order at the same price he/she has a sell order at - so he/she cannot buy his own shares for a fractional effective difference to create a market that doesn't exist.
- Small paint downs - for instance on $ECOX we have seen quantities like 1, 2, 12, 27 and 400 over the past several weeks - will be monitored and offenders will receive a warning when detected.
- Repeat offenders will have their account closed. The broker will at their discretion unilaterally liquidate all assets on the bid - as a low set market order if necessary - and send the proceeds to the former client. This is likely to represent a significant loss for offenders.
- Offenders are liable to be reported for contravening FINRA regulation.
I will continue to maintain a contemporaneous record of suspected manipulation attempts on any stock I have an interest in.
As a full-time, high volume trader, I maintain a dialogue with senior management at my broker regarding any trading issues I discover in the marketplace.
As long-term followers will know, manipulation attempts by scammers - mostly operating on iHub - to dupe people to sell on the bid - are a daily occurrence on multiple stocks at a time.
The well-known suspects usually target stocks with a thin share structure, a wide spread, those that have seen a significant gain in pps - either through recent high volume or reverse split - or a period of relative inactivity whilst reorganizing.
The scammers often make a "drive-by" sweep of several stocks making nonsense comments in the hours well after the close weekdays or at weekends in an attempt to create an illusion. Just check on some of the usual suspects on iHub by clicking on their username and see where they have posted.
The tactics used usually involve a combination of:
- Deliberately selling small amounts into the bid to give the illusion that others might also sell - sometimes by shorting.
- Disinformation - such as throwing out one liners like "scam" - "dead" - "shares to be dumped" - "dilution" - even when more credible posters have already demonstrated that is not the case and maintained a continuous history of company progress and trading analysis.
- Attempting to make personal attacks on positive posters.
- Two or more bashers working together and agreeing with each other's posts - particularly on amateur forums where most top traders can't be bothered to debunk the nonsense.
The above activities can be considered as "conspiracy to affect the price of a stock" which is a felony. In addition, many of the comments made about companies or their executives constitute defamation and / or internet harassment.
Recently, several top, high-volume traders have noticed increases in commission charges when they are the buyers of the "small volume" paint downs by the bashers - sometimes accruing charges on every day there is a paint down during the 60-day period of the GTC order where they are trying to prevent the bashers reloading.
The FINRA Regulations Compliance Departments of brokers are now specifically on the lookout for paint downs and other "trades for little benefit" and a variety of measures have recently been introduced by at least one of the main brokers:
- It is no longer possible for an individual to place a sell order at the same price he/she has a buy order at (but of course the basher's buy order could be lower so that gives a clue where to keep outbidding him for those who want to).
- It is no longer possible for an individual to place a buy order at the same price he/she has a sell order at - so he/she cannot buy his own shares for a fractional effective difference to create a market that doesn't exist.
- Small paint downs - for instance on $ECOX we have seen quantities like 1, 2, 12, 27 and 400 over the past several weeks - will be monitored and offenders will receive a warning when detected.
- Repeat offenders will have their account closed. The broker will at their discretion unilaterally liquidate all assets on the bid - as a low set market order if necessary - and send the proceeds to the former client. This is likely to represent a significant loss for offenders.
- Offenders are liable to be reported for contravening FINRA regulation.
I will continue to maintain a contemporaneous record of suspected manipulation attempts on any stock I have an interest in.
As a full-time, high volume trader, I maintain a dialogue with senior management at my broker regarding any trading issues I discover in the marketplace.
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"Per Ardua Ad Astra" - "Through Adversity To The Stars"
A very apposite motto for those who trade successfully in the OTC market..
All posts are my opinion - trade at your own risk.
A very apposite motto for those who trade successfully in the OTC market..
All posts are my opinion - trade at your own risk.