A recent article written by a former Goldman Sachs employee reveals how bankers fall into the kind of mistake that results in multi-billion-dollar legal settlements of government-brought lawsuits.Matt Levine, here, describes three settlements of government actions brought against State Street Corp., totaling slightly over million.“All he has really said is that he’s comfortable where he is and that there is likely a fit out there for him.” Monday into Tuesday has brought Kelly to the forefront of the Gators’ search for Jim Mc Elwain’s replacement.“I’m a little surprised how quickly this has moved, if this is accurate,” Finebaum said.The SEC seems relatively unconcerned about this faux pas. The second State Street suit is more straightforward. The reasons are legion: The standard means of portfolio change is to sell existing securities and then to buy new ones. I wrote this article myself, and it expresses my own opinions.I am not receiving compensation for it (other than from Seeking Alpha).The issue in the first suit was the existence of an undisclosed capability provided by Gov Ex to a single high frequency trader (HFT) using the platform.
Dark pools are exchange-like critters that have no SEC approval, so customers use them with less assurance of legal protection when the pool transgresses.
What puts financial institutions in trouble with the SEC?
Offering a financial service below cost with the intention of making a profit nonetheless.
(paragraph) But the surprisingly popular third approach is to give the HFTs everything they want and then lie about it, and a lot of market actions have been about exactly that.” In other words, these dark pools have nowhere to go. I must sell everything and buy new stuff,’ we take care of that in one fell swoop. If you enjoy watching bankers squirm when confronted with the inevitable double whammy that they create for themselves by offering a service below its cost, yet fully intending to make a profit, read Levine’s most recent article above and his earlier article here on the same event.
A dark pool is damned if it exists to serve the buy-side; damned again if it kowtows to the sell-side. This second State Street deception was quite a bit more expensive than the first.