Post by jannikki on Feb 28, 2007 19:57:12 GMT -4
STOCKGATE TODAY
An online newspaper reporting the issues of Securities Fraud
When News before the News Roams the Halls of Wall Street - February 28, 2007
Dave Patch
How rampant is the insider-trading network on Wall Street?
Let’s take a snapshot from yesterday and try to figure it out.
Early yesterday morning I was receiving calls that Pathmark Stores (PTMK) was to announce talks of a deal that involved Great Atlantic and Pacific Tea Company (GAP). The notices arrived shortly after the market opened and identified both of the principles involved in the deal as well as a "big name" hedge fund out of Connecticut .
Shortly after 3:00 yesterday afternoon, some 4 - 5 hours after I had heard the news, the announcement out of Pathmark was that a deal was in the works involving GAP. The result of the news halted trading in both PTMK and GAP.
The trading volume leading into this halt was 2.1 million shares with the previous three trading days trading at levels of 513K shares, 408K shares, and 413K shares respectively. More significantly, the only other time this year that the trading volume in PTMK exceeded 1 Million shares was on February 21, 2007 when it reached 1.7 Million shares.
How did the markets know of a pending deal before it was made public and who traded off the non-public news and for how long? Was it coincidence that trade volume went up 5-fold in the stock, with the stock increasing in value, during a period when the rest of the market was collapsing on sell side pressures?
Well a quick look at the SEC filings for PTMK shows that the name of the fund circulating with this news had also doubled their position in the company over the recent weeks raising their position to greater than 5% of the total shares issued and outstanding. Was this all coincidence?
Instead of acting on this non-public information as Wall Street would do, I sent a time stamped note to the NASD identifying exactly what I knew and who the principles involved were. The time stamps to these communications were 11:06 a.m. and 12:26 p.m.
And while the NASD has no jurisdiction over a non-registered hedge fund the SEC does. The notice to the NASD was with respect to PTMK, which trades under their jurisdiction and the members of Wall Street who were trading off this information.
Time may tell whether inside information was involved in the transactions leading into the public announcement of the news. Time will also tell about how serious the SEC is at confronting possible insider trading allegations against hedge funds; well connected hedge funds.
The question I have for our regulators is quite simple: If I am hearing of non public pending deals taking place between two companies, and Wall Street is trading on this news instead of reporting it, how investor friendly are these markets?
Former SEC attorney Gary Aquirre stepped up to the table and under oath reported that such insider trading activities are very real. The SEC dismissed his allegations. The question now is; was what I reported "inside information" and if so who was able to take advantage of trading before news broke and before the stock trading was halted and will the SEC dismiss the abuse for liquidity?
For more on this issue please visit the Host site at www.investigatethesec.com (posted with permission)
Copyright 2007
An online newspaper reporting the issues of Securities Fraud
When News before the News Roams the Halls of Wall Street - February 28, 2007
Dave Patch
How rampant is the insider-trading network on Wall Street?
Let’s take a snapshot from yesterday and try to figure it out.
Early yesterday morning I was receiving calls that Pathmark Stores (PTMK) was to announce talks of a deal that involved Great Atlantic and Pacific Tea Company (GAP). The notices arrived shortly after the market opened and identified both of the principles involved in the deal as well as a "big name" hedge fund out of Connecticut .
Shortly after 3:00 yesterday afternoon, some 4 - 5 hours after I had heard the news, the announcement out of Pathmark was that a deal was in the works involving GAP. The result of the news halted trading in both PTMK and GAP.
The trading volume leading into this halt was 2.1 million shares with the previous three trading days trading at levels of 513K shares, 408K shares, and 413K shares respectively. More significantly, the only other time this year that the trading volume in PTMK exceeded 1 Million shares was on February 21, 2007 when it reached 1.7 Million shares.
How did the markets know of a pending deal before it was made public and who traded off the non-public news and for how long? Was it coincidence that trade volume went up 5-fold in the stock, with the stock increasing in value, during a period when the rest of the market was collapsing on sell side pressures?
Well a quick look at the SEC filings for PTMK shows that the name of the fund circulating with this news had also doubled their position in the company over the recent weeks raising their position to greater than 5% of the total shares issued and outstanding. Was this all coincidence?
Instead of acting on this non-public information as Wall Street would do, I sent a time stamped note to the NASD identifying exactly what I knew and who the principles involved were. The time stamps to these communications were 11:06 a.m. and 12:26 p.m.
And while the NASD has no jurisdiction over a non-registered hedge fund the SEC does. The notice to the NASD was with respect to PTMK, which trades under their jurisdiction and the members of Wall Street who were trading off this information.
Time may tell whether inside information was involved in the transactions leading into the public announcement of the news. Time will also tell about how serious the SEC is at confronting possible insider trading allegations against hedge funds; well connected hedge funds.
The question I have for our regulators is quite simple: If I am hearing of non public pending deals taking place between two companies, and Wall Street is trading on this news instead of reporting it, how investor friendly are these markets?
Former SEC attorney Gary Aquirre stepped up to the table and under oath reported that such insider trading activities are very real. The SEC dismissed his allegations. The question now is; was what I reported "inside information" and if so who was able to take advantage of trading before news broke and before the stock trading was halted and will the SEC dismiss the abuse for liquidity?
For more on this issue please visit the Host site at www.investigatethesec.com (posted with permission)
Copyright 2007