It is with growing concern that I have watched trends within the stock markets move towards perpetuation of an environment in which the larger firms and corporations are enabled to use money, leverage, technology (as in high-speed trading, and access to media in order to disenfranchise or even defraud those without the same level of resources.
This manipulation appears to manifest itself in two primary ways. One is what appears to be the use of a cooperative strategy by Wall Street’s largest firms to use a combination of analyst’s reports, reports to the media, timed upgrades/downgrades, and buy/sell strategies by their own trading desks in order to channel the direction of the stock price and to then unethically and perhaps illegally profit from this combination of methodologies.
The other is a similar strategy by hedge funds. Hedge funds under current regulations provide little or no visibility of their trading patterns, strategies or activities, essentially allowing them free rein to manipulate stock prices in ways not compatible with the normal trends produced by supply and demand.
Both of these situations work to the detriment of the average investor. They tend to drive the smaller or average investor completely out of the stock markets with the conclusion that the “market is rigged”. In fact this certainly appears to be the case in an unfortunate number of circumstances.
Let us consider the case of Intel. Intel has been locked in a trading range for years. Even when they recorded five years of 27 percent annual growth, the P/E ratio was continuously and significantly below that of the average S&P 500 company while they performance was hugely better. Every time Intel threatened to move to a higher level, Wall Street’s largest firms would apparently band together with a barrage of downgrades and negative media comments. The result was a continuous valuation under what any reasonable analysis would support as being fair. Whether these firms traded against Intel in addition needs to be determined.
I therefore ask for consideration of the following:
1.) An investigation of the manner in which Wall Street’s largest firms internally trade, correlated against analyst recommendations, upgrade/downgrade releases, and reports to the media.
2.) An investigation of the manner of trading across Wall Street’s largest firms to determine if there is any pattern of cooperation or collusion in regards to particular stocks.
3.) The development of new regulations resulting in greater transparency of hedge fund trading in order to determine if they are using money and leverage to manipulate the market and stock prices in a manner inconsistent with stock market fairness and stability.
4.) An investigation of large Wall Street firm and hedge fund trading of Intel Corporation to determine if they are engaged in activities which unfairly or illegally deny Intel a fair valuation.
5.) An investigation into naked shorting of Intel.
Thank you for your time and efforts in helping to establish a market environment free of fraud, manipulation and methodologies which disenfranchise smaller investors.