the finance industry / wall street

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http://www.reuters.com/article/2011/09/15/us-ubs-idUSTRE78E15I20110915

(Reuters) - Swiss bank UBS said a trader who had lost it around $2 billion in unauthorized deals had been arrested in London, where police were holding 31-year-old Kweku Adoboli.

dayo, Thursday, 15 September 2011 17:38 (2 years ago) Permalink

The trader in question, Mr. Adoboli, who graduated with an honors degree in computer science from the University of Nottingham,

think about all the social media websites these guys could be starting

dayo, Thursday, 15 September 2011 17:39 (2 years ago) Permalink

One of the few noteworthy moments in Michael Moore's last film was showing how Wall Street woos math majors.

Anakin Ska Walker (AKA Skarth Vader) (Alfred, Lord Sotosyn), Thursday, 15 September 2011 17:40 (2 years ago) Permalink

haha this same conv is going on in the grad school thread

iatee, Thursday, 15 September 2011 17:41 (2 years ago) Permalink

hardly surprising though. from reading books about when finance companies fuck up, this kind of thing happens every 2-3 years. bet these companies build this into their models.

dayo, Thursday, 15 September 2011 17:41 (2 years ago) Permalink

lol

caek, Thursday, 15 September 2011 17:41 (2 years ago) Permalink

like "commodities market volatile this year, 23% chance... blue chips up this year, 10% chance... broken arrow rogue trader, 25% chance...oh, pizza's here! meeting adjourned"

dayo, Thursday, 15 September 2011 17:42 (2 years ago) Permalink

"we model so well when we're on cocaine!" *fist bumps*

caek, Thursday, 15 September 2011 17:43 (2 years ago) Permalink

sorry "I love that we can model while were on cocaine"

caek, Thursday, 15 September 2011 17:43 (2 years ago) Permalink

buzza, Thursday, 15 September 2011 17:51 (2 years ago) Permalink

But I don't care. I expect to make enough money to be out of this business in a few years. I think I would like to go back to university. I have become very interested in the humanities and philosophy.

my friend used to work for a company that designed materials to help assuage successful businessmen about their guilt at having made huge amounts of money

it was a bunch of pseudophilosophical tracts that, when boiled down, said "yes, you DESERVED to make all that money! don't feel bad! if you like, give some to charity!"

dayo, Thursday, 15 September 2011 21:20 (2 years ago) Permalink

that's amazing

iatee, Thursday, 15 September 2011 21:21 (2 years ago) Permalink

haha you know him! you can ask T about it sometime

dayo, Thursday, 15 September 2011 21:22 (2 years ago) Permalink

!

how would u even find such a company? do they leave brochures lying around hotels in st moritz

diouf est le papa du foot galsen merde lè haters (nakhchivan), Thursday, 15 September 2011 21:23 (2 years ago) Permalink

company reps on every 35th storey ledge in new york

diouf est le papa du foot galsen merde lè haters (nakhchivan), Thursday, 15 September 2011 21:24 (2 years ago) Permalink

I wish I could find the article, from the NYT I think, about a Ph.D. in math from Berkeley, a logician even, who took a quant job, made gobs of cash, fucked things up so that his company lost gobs of cash, quit, & ended up doing shark fishing in the Pacific, because it had the thrills to which he'd become accustomed on Wall Street.

Euler, Thursday, 15 September 2011 21:24 (2 years ago) Permalink

article would be from the late 1990s I think

Euler, Thursday, 15 September 2011 21:24 (2 years ago) Permalink

haha wow yeah I'm gonna I want to hear more xp

iatee, Thursday, 15 September 2011 21:25 (2 years ago) Permalink

I might be misremembering but I think that's the thrust

I imagine this company was probably started by a successful businessman turned professional confessional

dayo, Thursday, 15 September 2011 21:25 (2 years ago) Permalink

pretty sure that article wasn't from the 90s cuz it would have been made into a major motion picture with cuba gooding jr in a supporting role

diouf est le papa du foot galsen merde lè haters (nakhchivan), Thursday, 15 September 2011 21:27 (2 years ago) Permalink

relevant to our interests here:

If Aristotle Ran General Motors: The New Soul of Business

written by a former Notre Dame philosophy prof who now is fantastically wealthy peddling this sorta stuff to the plutocrats

Euler, Thursday, 15 September 2011 21:28 (2 years ago) Permalink

I've looked SO LONG for that article over the last few years (shark fishing quant I mean); I think I read a scan of it on a webpage in the 90s & now I can find nothing.

Euler, Thursday, 15 September 2011 21:29 (2 years ago) Permalink

the monk who sold his ferrari kinda shite

talking heads, quiet smith (darraghmac), Friday, 16 September 2011 17:33 (2 years ago) Permalink

have long pondered a book of common-sense negativity, provisional title 'feel the fear and cop the fuck on'

talking heads, quiet smith (darraghmac), Friday, 16 September 2011 17:36 (2 years ago) Permalink

Detective Superintendent Lee Neiles told the hearing: ‘Mr Birch had been redundant since September 2009 and had had difficulties in finding other means of employment, although the family were financially stable.’

god I *hate* the british use of the term 'redundant'. it's so callous.

iatee, Friday, 16 September 2011 17:41 (2 years ago) Permalink

not in the british meaning, though

talking heads, quiet smith (darraghmac), Friday, 16 September 2011 17:43 (2 years ago) Permalink

iykwim

talking heads, quiet smith (darraghmac), Friday, 16 September 2011 17:44 (2 years ago) Permalink

yeah I guess I didn't think of that! but from an american's perspective it just sounds evil.

iatee, Friday, 16 September 2011 17:44 (2 years ago) Permalink

here it's like 'you were bad at your job' or 'we can't afford you' but 'redundant' gives me a sense of 'you are unnecessary as a human being'

which means it probably was correctly used w/r/t to this banker, but outside of that...

iatee, Friday, 16 September 2011 17:47 (2 years ago) Permalink

nobody rly uses redundant as a synonym for unemployed and 'laid off' is more often used instead of 'made redundant' in newspapers etc

i think it's just policemen and their strangely clunky phrasing, cf 'other means of employment' instead of 'a job'

diouf est le papa du foot galsen merde lè haters (nakhchivan), Friday, 16 September 2011 17:48 (2 years ago) Permalink

'made redundant' still common terminology iirc, though there's subtle emp. law differences between the two i think

talking heads, quiet smith (darraghmac), Friday, 16 September 2011 17:50 (2 years ago) Permalink

it is a shitty term tho, def

diouf est le papa du foot galsen merde lè haters (nakhchivan), Friday, 16 September 2011 17:51 (2 years ago) Permalink

eh i dunno, it's quite useful as a means of conveying the right tone of contempt society ought to feel for the wastrel layabouts tbh

talking heads, quiet smith (darraghmac), Friday, 16 September 2011 17:53 (2 years ago) Permalink

I have no problem w/redundant. It doesn't imply fault like 'fired' does. It implies that the employer doesn't have any meaningful/profitable work for you to do.

em vee equals pea queue (Michael White), Friday, 16 September 2011 18:01 (2 years ago) Permalink

that's awful

partistan (dayo), Friday, 16 September 2011 19:18 (2 years ago) Permalink

this is typical police illiterately pretentious usage though. no one except a policeman would say "he has been redundant for a year". you get made redundant, and then you are unemployed. like how only police say "i was proceeding along oxford st" or "he asked myself how to get to piccadilly circus".

caek, Saturday, 17 September 2011 07:51 (2 years ago) Permalink

holler

is it shakeymostep? (cozen), Saturday, 17 September 2011 08:52 (2 years ago) Permalink

Redundant is only a little better than 'managed out'. Not by much.

xyzzzz__, Saturday, 17 September 2011 08:59 (2 years ago) Permalink

further underscoring the impotency of the SEC

http://www.nytimes.com/2011/09/17/business/sec-official-in-madoff-case-may-draw-a-criminal-inquiry.html?_r=1

partistan (dayo), Saturday, 17 September 2011 11:40 (2 years ago) Permalink

ts your maddie vs our maddie

talking heads, quiet smith (darraghmac), Saturday, 17 September 2011 14:37 (2 years ago) Permalink

Adoboli (who, let me stress, has yet to enter a plea) was in exchange traded funds – which used to look like unit trusts, but have got increasingly complicated. One of the top market regulators, Mario Draghi, recently described ETFs as "reminiscent of what happened in the securitisation market before the crisis". Read that quote again: he's comparing them to sub-prime mortgages. Most of us should get very worried; rogue traders should go steaming in.

http://www.guardian.co.uk/commentisfree/2011/sep/19/brain-food-ubs-kweku-adoboli/print

diouf est le papa du foot galsen merde lè haters (nakhchivan), Monday, 19 September 2011 23:12 (2 years ago) Permalink

http://www.nytimes.com/2011/09/21/business/dodd-frank-act-is-a-target-on-gop-campaign-trail.html

Republicans say Dodd-Frank is the root of some of today’s economic problems. It has stopped banks from lending to “job creators,” they contend, and is a direct cause of high unemployment. “It created such uncertainty that the bankers, instead of making loans, pulled back,” said Mitt Romney, the former Massachusetts governor, speaking at a South Carolina rally over Labor Day weekend where he again called for the law’s repeal.

ahahahaha

hahahah

haha

...

*shoots self*

Whiney G. Blutfarten (dayo), Wednesday, 21 September 2011 10:27 (2 years ago) Permalink

http://www.spiegel.de/international/zeitgeist/0,1518,788462,00.html

for this headline I am not against journalistic muckraking

dayo, Monday, 26 September 2011 18:56 (2 years ago) Permalink

Jérôme Kerviel, gambled away billions in 2010. He is still serving a three-year jail sentence.

p cool how you can lose billions and just do 3 years in a minimum security jail

dayo, Monday, 26 September 2011 18:56 (2 years ago) Permalink

that study sounds pretty weak but oh well i'm still always happy when people push the psychopath angle, cuz if there were a cultural and spiritual system that caused and possibly even mandated people who were not psychopaths to behave like psychopaths that system might benefit from review

the-dream in the witch house (difficult listening hour), Monday, 26 September 2011 19:31 (2 years ago) Permalink

never review ILM, please

dayo, Monday, 26 September 2011 19:33 (2 years ago) Permalink

Milton Parker, Monday, 26 September 2011 19:56 (2 years ago) Permalink

yeesh

runaway (Matt P), Monday, 26 September 2011 19:59 (2 years ago) Permalink

Matt Levine lays out the contrarian case:

http://www.bloombergview.com/articles/2014-03-31/michael-lewis-doesn-t-like-high-frequency-traders

o. nate, Monday, 31 March 2014 21:35 (2 weeks ago) Permalink

After reading both the Lewis article and the "counterpoint" I'm still not sure I understand whether HFT is actually driving up the costs for the end buyers and sellers or just capturing a little of the spread that previously would have been taken by ordinary traders.

james franco tur(oll)ing test (Hurting 2), Tuesday, 1 April 2014 01:59 (2 weeks ago) Permalink

There may be HFTs doing genuine market-making, which arguably could benefit other market participants, but in the more clearly abusive cases, such as "slow market arbitrage", it's hard to argue that they're benefiting anyone other than themselves, IMO. They seem to drive up prices mainly for large institutional buyers who face the problem of executing large orders that can't be filled all at once. The impact is probably less for individual traders, except indirectly through mutual funds and such.

o. nate, Tuesday, 1 April 2014 02:58 (2 weeks ago) Permalink

So this might sound a little stupid because I don't think I fully understand spreads and market-making, but here's where I'm confused. I get the general idea of how they're front-running the order: institutional investor wants to by 100K shares of ACME, and in order to purchase that kind of volume they buy on several different exchanges. But because the order gets to one exchange a few tiny fractions of a second earlier than it gets to the others, HFTs are able to get out ahead of the order at the other exchanges. What I don't understand is, what are they then doing? They're purchasing the shares before the institutional investor's broker can and then very slightly hiking the price? To more than the institutional client bid? What if the institutional client balks at the new higher price?

james franco tur(oll)ing test (Hurting 2), Tuesday, 1 April 2014 03:28 (2 weeks ago) Permalink

I just assume it's a bunch of algorithms manipulating various positions to disrupt the market and skim off the top of the transaction they're about to make. I think these kinds of trades involve a shit ton of money but I also didn't rtfa

panettone for the painfully alone (mayor jingleberries), Tuesday, 1 April 2014 04:16 (2 weeks ago) Permalink

What I don't understand is, what are they then doing? They're purchasing the shares before the institutional investor's broker can and then very slightly hiking the price? To more than the institutional client bid? What if the institutional client balks at the new higher price?

― james franco tur(oll)ing test (Hurting 2), Monday, March 31, 2014 11:28 PM Bookmark Flag Post Permalink

well prices are always slightly variable moment to moment so execution orders necessarily have a little leeway on either side.

wat is teh waht (s.clover), Tuesday, 1 April 2014 04:59 (2 weeks ago) Permalink

I suppose the institutional buyer could balk at the new slightly higher price. But it seems like usually they do need to buy the shares so they just pay up the extra few cents.

o. nate, Tuesday, 1 April 2014 14:39 (2 weeks ago) Permalink

Felix Salmon is also unconvinced this is a big deal

http://blogs.reuters.com/felix-salmon/2014/03/31/michael-lewiss-flawed-new-book/

but I kind of wonder if anyone is adequately describing the full scope of what these high-speed/algo firms do.

james franco tur(oll)ing test (Hurting 2), Tuesday, 1 April 2014 14:42 (2 weeks ago) Permalink

he didn't even finish reading it yet, lol

waterbabies (waterface), Tuesday, 1 April 2014 14:46 (2 weeks ago) Permalink

Re: Salmon - I think he's forgetting that for most people, the bulk (if not all) of their investments are in their pensions/401Ks. And it sounds like it's those type of funds that are getting screwed by HFT.

schwantz, Tuesday, 1 April 2014 15:27 (2 weeks ago) Permalink

If anything this is the most recent story in a long chain of 'the market is rigged' quasi revelations of the past couple decades. if you didn't know the market is rigged already you're not paying attention.

then again I've had all my money in a savings account for the last decade like a fucking asshole so what do I know

panettone for the painfully alone (mayor jingleberries), Tuesday, 1 April 2014 16:02 (2 weeks ago) Permalink

NEW YORK (Reuters) - U.S. stocks opened the second quarter on a higher note on Tuesday, with the S&P 500 hitting >>>a record high<<<, after data on manufacturing indicated economic growth was gaining traction after a harsh winter.

^Part of the reason for lack of traction? Market is up like 125% in 5 years.

bnw, Tuesday, 1 April 2014 16:18 (2 weeks ago) Permalink

This is a neat site to play with wrt the S&P
http://www.multpl.com/

Looks like we are hitting not only a nominal but nearing a real (inflation-adjusted) high in the S&P. However, earnings are also nearing a high. BUT, P/E looks high historically -- not insane high, but like probably ready for a correction high.

james franco tur(oll)ing test (Hurting 2), Tuesday, 1 April 2014 16:57 (2 weeks ago) Permalink

btw you know what else is historically pretty high? Home prices:
http://www.multpl.com/case-shiller-home-price-index-inflation-adjusted/

james franco tur(oll)ing test (Hurting 2), Tuesday, 1 April 2014 16:58 (2 weeks ago) Permalink

the article salmon links to that he wrote earlier on HFT points to the real issues.

if it really is just skimming fractions of pennies whatever, but the problem is they do much more than that and occasionally go nuts. also when something goes wrong everything goes massively out of control quickly, and furthermore they only 'provide liquidity' when everything is already liquid. the moment there's a disruption they pull out entirely and things go massively jagged.

the problem i'd imagine for the book is that getting ppl to talk about their weird prop algos is _hard_, but getting them to talk about being "more efficient" by a fraction of a second is the sort of thing they're not afraid to play up.

wat is teh waht (s.clover), Wednesday, 2 April 2014 20:29 (2 weeks ago) Permalink

yeah theyre not called black boxes for nothing

panettone for the painfully alone (mayor jingleberries), Wednesday, 2 April 2014 21:00 (2 weeks ago) Permalink

I think some of the "pro" arguments are making it sound like these company's just narrow the spreads, but my impression is that they actually inflate the price very slightly.

And yeah there is more stuff that HFTs do than just this kind of quasi-frontrunning, and I agree that the "provide liquidity" argument doesn't seem to make much sense, or if it does there's just something I'm not understanding. If 100,000 shares are already available for sale and all an HFT does is instantly buy and resell them, that might increase trading volume by a lot but it doesn't seem to truly increase liquidity in any meaningful sense.

james franco tur(oll)ing test (Hurting 2), Wednesday, 2 April 2014 21:24 (2 weeks ago) Permalink

lewis is a great writer tho and the excerpts are just excerpts so i'll read the real book and see then.

(nb: i've met people at hft shops that really are pretty simple stuff, in the main [or at least rumored to be, they're not allowed to say], and also have met ppl at other more hedgefundy hft shops, and the ones at the fancier ones from what i've heard look down at the other guys as chumps who don't like to take risks. also the _exact same_ sort of not-really-frontrunning happened way before hft and electronic trading took off, because at human scale time you can still spot the pattern of a big order being chunked out in blocks and get ahead of it)

wat is teh waht (s.clover), Wednesday, 2 April 2014 22:05 (2 weeks ago) Permalink

Well, "could spot" is probably more accurate than "can spot" no? I mean these orders themselves move so fast now that only the HFT guys can see them in "real time" is my impression, no?

james franco tur(oll)ing test (Hurting 2), Wednesday, 2 April 2014 22:07 (2 weeks ago) Permalink

http://www.slate.com/articles/business/books/2014/04/michael_lewis_s_flash_boys_about_high_frequency_trading_reviewed.html

More Felix Salmon (I think. I have not compared to the earlier Salmon Reuters article linked above)

But what we’re seeing, in the world of HFT, is not fraud, nor is it insider trading. Rather, HFT is a ridiculously and unnecessarily complicated mechanism for divvying up intermediation revenues between banks, exchanges, high-tech telecommunications outfits, and various algo-driven shops. Everybody is in on the game: not just the HFT guys, but also the exchanges, which optimize themselves for HFT game-playing, and the banks, which let HFTs into their dark pools, and especially the SEC, which has been cheering on the whole motley crew from the beginning. Even the big money managers are in on the act.

curmudgeon, Monday, 7 April 2014 16:21 (1 week ago) Permalink

^^

schwantz, Monday, 7 April 2014 19:44 (1 week ago) Permalink

Nonsense. That's pretty much like saying "let's stop talking about Crimea because the real crisis is in (Syria, Palestine, ____)"

Besides, (1) I don't think we fully know the impact and/or potential impact of this stuff, and (2) in any case, the entire market has dramatically restructured itself in less than a decade, and it's something that needs to be better understood. Maybe it's not something the average person needs to care all that much about, but it's still an important topic.

ביטקוין‎ (Hurting 2), Wednesday, 9 April 2014 14:56 (1 week ago) Permalink

Also, it seems to me like Wall Street and various trading firms feel very threatened by all this discussion. There's lots of spinning and covering and smokescreening going on. A lot of people with interests in this activity are unhappy about all the attention. That alone to me says we should look at it more closely. Goldman Sachs today announced that it's considering closing its dark pool all of a sudden. That sounds like anxious behavior to me.

ביטקוין‎ (Hurting 2), Wednesday, 9 April 2014 14:58 (1 week ago) Permalink

nah i agree with cathy here. 'fixing' hft wouldn't fix anything about what's really wrong. to flip hurting's analogy, focusing on HFT is like complaining israeli soldiers in the occupied territories aren't getting meals with a proper nutritional balance.

wat is teh waht (s.clover), Wednesday, 9 April 2014 15:12 (1 week ago) Permalink

"the food is terrible."

"and in such small portions!"

wat is teh waht (s.clover), Wednesday, 9 April 2014 15:12 (1 week ago) Permalink

I remember leftish publications making an issue over interest rate swaps that wound up screwing over municipalities/pension funds. That was an smaller issue in terms of magnitude of impact, and the banks' conduct there was more justifiable and less egregious. Skimming off small amounts from every trade a public pension fund makes still aggregates to a good chunk of money that does wind up costing individual retirees.

ביטקוין‎ (Hurting 2), Wednesday, 9 April 2014 15:19 (1 week ago) Permalink

if yr referring to swaps manipulation i think the "screwing pensions funds" angle on that was pretty fake too. depended what side of the swap they were on!

wat is teh waht (s.clover), Wednesday, 9 April 2014 16:00 (1 week ago) Permalink

http://www.thenation.com/article/179233/why-wall-street-firms-make-terrible-landlords

Big money and cutthroat landlords have never been strangers to New York’s real estate market. But the descent of private equity firms on the city in the early years of this century was so striking that housing advocates dubbed the practice “predatory equity.” The name refers to the tactics these companies resorted to once it became clear that longtime tenants weren’t going to leave.

...

For tenants, these private equity purchases were essentially a lose-lose situation. For the deal to succeed, tenants had to be forced out. If, on the other hand, the deal failed and tenants got to stay, landlords immediately disinvested from the buildings, making the living conditions worse than ever.

Orson Wellies (in orbit), Wednesday, 9 April 2014 16:04 (1 week ago) Permalink

^ insane. gonna re-post it in the gentrification thread

hug niceman (psychgawsple), Wednesday, 9 April 2014 17:01 (1 week ago) Permalink

if yr referring to swaps manipulation i think the "screwing pensions funds" angle on that was pretty fake too. depended what side of the swap they were on!

― wat is teh waht (s.clover), Wednesday, April 9, 2014 12:00 PM Bookmark Flag Post Permalink

Well yeah, and I also found it pretty unconvincing that taking the wrong side of an interest rate swap was the same as "getting screwed" -- they just bet the wrong way on rates. So maybe a bad example.

ביטקוין‎ (Hurting 2), Wednesday, 9 April 2014 18:50 (1 week ago) Permalink

Also, in re that landlord thing -- as I said in the other thread, I lived in a building that had been bought by Black Rock. We were market rate tenants, but there were a lot of stabilized tenants left. There was definitely an effort to push them out, although I didn't get the impression that they were denying basic services -- mostly more doing "improvements" to the building and then seeking rent board increases. They had a very good management company running the place -- at least they were good to us, perhaps less so to the stabilized tenants.

What strikes me about that nation piece and about the practice described is how NAIVE it actually sounds like some of these investment funds are being about owning and managing rental properties. Their assumptions just sound totally unrealistic.

ביטקוין‎ (Hurting 2), Wednesday, 9 April 2014 20:42 (1 week ago) Permalink

More on that, with scathing quotes from a retiring SEC attorney
http://www.businessweek.com/news/2014-04-08/sec-goldman-lawyer-says-agency-too-timid-on-wall-street-misdeeds

The SEC has become “an agency that polices the broken windows on the street level and rarely goes to the penthouse floors,” Kidney said, according to a copy of his remarks obtained by Bloomberg News. “On the rare occasions when enforcement does go to the penthouse, good manners are paramount. Tough enforcement, risky enforcement, is subject to extensive negotiation and weakening.”

ביטקוין‎ (Hurting 2), Friday, 11 April 2014 15:57 (1 week ago) Permalink

motherfuckers.

purposely lend impetus to my HOOS (BIG HOOS aka the steendriver), Friday, 11 April 2014 22:23 (1 week ago) Permalink


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