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Telegraph Tomorrow: "revealed: The Dirty Tricks Of Rogue Traders"

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Edit: linkage - http://www.telegraph.co.uk/money/main.jhtm.../nhedgie121.xml

Revealed: the dirty tricks of rogue traders

By Robert Winnett

Last Updated: 11:06pm GMT 20/03/2008

A hedge fund based in London set up a "dirty-tricks unit" to manipulate share prices and get illicit information on companies in an attempt to make millions on the stock market, an insider has revealed.

As the official hunt began for the rogue traders who tried to bring down Britain's biggest mortgage lender, HBOS, The Daily Telegraph can reveal a whistle-blower's account of how a multi-billion pound fund allegedly used illegal tactics to drive down stock prices.

Private detectives were allegedly employed to hack into executives' emails and telephone records.

Front companies were set up to allow the hedge fund traders to pose as independent researchers or journalists.

Negative information on companies was then distributed to leading investment banks in the hope that rumours would spread and some share prices would fall.

The hedge fund, which cannot be named for legal reasons, stood to make millions from "short-selling" the shares as they fell in value.

The allegations — made in a sworn statement seen by The Daily Telegraph and which has been sent to financial regulators — will add to growing concern over the activities of rogue traders in the City.

The Financial Services Authority, the City regulator, has begun a criminal investigation to find the trader who allegedly made £100 million from the 17 per cent slump in HBOS shares on Wednesday.

The shares fell after "malicious" rumours were spread in the City about the bank, sparking fears that the price had been illegally manipulated — a move described as "the modern day version of bank robbery".

FSA investigators are seeking emails sent to traders that are thought to have prompted widespread selling of HBOS shares. They claimed the bank was experiencing difficulties.

It has emerged that the rumours are thought to have originated in the Far East, with Singapore named as the most likely source. Nick Leeson, the notorious rogue trader responsible for the collapse of Barings Bank, also operated in Singapore.

In a separate development, Credit Suisse, the investment bank, admitted that it had uncovered a separate £1.4 billion share-dealing scam by rogue traders — many of whom were based in London — who were trying to protect their bonuses.

The Credit Suisse traders are understood to have sought to cover up their trading losses at the end of last year.

The revelations follow a week of turmoil in the global markets after the near collapse of the American investment bank Bear Stearns.

Following a meeting with the major banks, it emerged that the Bank of England was considering helping to alleviate the financial crisis by easing the restrictions on banks seeking to borrow money from it.

The accusations about the hedge fund form the most detailed account yet of the illicit activity carried out by the London office of a major international hedge fund. Such tactics are also thought to be used by other hedge funds.

The sworn statement containing the allegations is understood to have been sent to the FSA last year although it is not known what action the regulator took.

The document alleges that:

- Employees of the hedge fund ordered an American-based private detective to hack into the corporate email systems of two firms in which the hedge fund had an interest.

- A bogus firm — with a phoney internet address — was established to allow employees to pose as independent researchers and approach company executives to garner information on their firms' future financial prospects. The firm was also used to gain access to industry conferences.

- A false website — with a bogus address — was also registered to allow hedge fund traders to pose as journalists. The offices of American politicians were approached by people claiming to be journalists to obtain information about potential new laws banning internet gambling that would hit British firms.

- Jurors and their families in a sensitive legal case into whether a firm had exclusive patent rights in which the hedge fund had invested were "tapped up". Money was allegedly paid to jurors' families for information about jury-room deliberations.

  - Hedge fund staff gathered "sensitive" negative information on firms in which they had an interest in the share price falling. This information was distributed to leading investment banks whose experts were encouraged to take a dim view of the prospects of the company's shares. A German "media consultant" was also used to disseminate information.

- A safe containing large amounts of cash was installed in the hedge fund's office. Money was paid to "sources" providing valuable inside information. On one occasion, an anonymous informant was paid $50,000.

The hedge fund at the centre of the allegations has offices in London's West End and traders spent their staff Christmas party on a luxury cruise.

It was set up by former senior executives from a blue-chip investment firm. However, from 2005, the "dirty-tricks unit" was staffed by former corporate investigators and investigative journalists hired from newspapers.

Pressure is growing on the FSA to clamp down on the worst excesses of the hedge fund industry after a series of scandals culminating in the attempt this week to start a run on HBOS.

The hedge fund "dirty tricks unit" exposed today was set up in London but operated around the world. It is alleged that this was to avoid tougher regulatory controls in New York.

On Thursday, Britain's biggest banks met with the Bank of England to urge them to loan more money to help alleviate the impact of the global credit crunch.

The Bank, which agreed to some of the demands, released another £5 billion for the money markets. The stock market, which dropped slightly, is now closed until Tuesday.

HBOS shares recovered on Thursday, closing up more than six per cent.

More greed, more fraud.... :angry:

Edited by Prophet_of_Pwnage

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There is no such thing as a Rogue Trader, it is a conpiracy by the BoE and Government to hide the truth about the Credit Crisis

Hey! You stole my line :lol:

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Guest Charlie The Tramp

Forgot to add as an article it is quite good, detailed, and well written. :)

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Another one?

Square Mile Securities

Latest statement – 20 March 2008

On 19 March 2008, the London Gazette published a notice of a meeting on 28 March 2008 for creditors of Square Mile Securities. The meeting, to nominate a liquidator, will be at the offices of David Rubin & Partners, at Pearl Assurance House, 319 Ballards Lane, London N12 8LY.

Asher Miller FCA of David Rubin & Partners, currently acting as insolvency practitioner to the company, will provide creditors with free information about the company before the meeting.

Most of the firm's regulatory permissions have now been removed.

Previous statement – 14 January 2008

This London-based stockbroker has been fined £250,000 for persistently using high pressure sales tactics and misleading information to sell customers shares that they did not want or could not afford.

The firm has agreed to send its customers a letter advising them of the FSA's findings and information on how to make a complaint.

http://www.moneymadeclear.fsa.gov.uk/news/...quare_mile.html

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Edit: linkage - http://www.telegraph.co.uk/money/main.jhtm.../nhedgie121.xml

More greed, more fraud.... :angry:

......no..just evidence the regulators out there are not bright enough to deal with people who are organised and play dirty to make money .....time to for them to recruit people who can deal with fraud in the 21st century .....what's the point of regulatory infrastructure if it's staffed by dummies....?..... <_<

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Guest Charlie The Tramp
......no..just evidence the regulators out there are not bright enough to deal with people who are organised and play dirty to make money .....time to for them to recruit people who can deal with fraud in the 21st century .....what's the point of regulatory infrastructure if it's staffed by dummies....?..... <_<

How deep does the rabbit hole go with these City wide boys, I would say to the depths of darkness and tiring digging is required, the hole then goes deeper as you get there requiring you to dig even deeper. These people believe it is their divine right to carry on as they do and honestly to them is for the muppets

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How deep does the rabbit hole go with these City wide boys, I would say to the depths of darkness and tiring digging is required, the hole then goes deeper as you get there requiring you to dig even deeper. These people believe it is their divine right to carry on as they do and honestly to them is for the muppets

...to these bright screen nerds it's just another internet game .....with ill gained profits .....and sometimes losses..... <_<

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Guest Charlie The Tramp
with ill gained profits .....and sometimes losses..... <_<

With the probability of scoring 2 gains and 1 loss.

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IMPO the whole System is rotten to the core with these people making hundreds of millions at the expense of the global population. They are unregulated, seemingly outside of the Law and untouchable and just plain rotten.

In days gone by such people would have been publicly lynched by now. The Public shoudl demand some seriously long-term jail sentences for these people. Won't happen of course but, boy, if you are an old lady who does not pay your Council Tax then off with your head! The City treats us all as a joke.

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It has reached a point where banks no longer TRUST each other to lend between, why should the investor / depositor

The banks have set themselfs up for a fall. Trust, perception and liquidity is all they are after now. Hence mutibillion profit payouts, its just a lie to say we are strong.

No bank major bank will fail, it will be taken over / lied about (just think about the disclosure of banks borrowings from BOE).

The strongest perceived will survive ( I Hope).

LIES LIES and more LIES

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IMPO the whole System is rotten to the core with these people making hundreds of millions at the expense of the global population. They are unregulated, seemingly outside of the Law and untouchable and just plain rotten.

In days gone by such people would have been publicly lynched by now. The Public shoudl demand some seriously long-term jail sentences for these people. Won't happen of course but, boy, if you are an old lady who does not pay your Council Tax then off with your head! The City treats us all as a joke.

...the City is out of control because of the Brown clown...... <_<

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How come we never heard of 'DIRTY TRADERS' that talk the market up!

Don't tell me that has never happened. investors losing money on a bad tip!

Edited by tuggybear

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...the City is out of control because of the Brown clown...... <_<

Apparently HBOS was targeted because HBOS has the largest number of private shareholders of any financial institution in the UK. Everyone who has one of their ISAs or Peps has shares with HBOS as does everyone who gained shares from when the Halifax demutalised. Many are retired types who simply have left their shares idle for all these years.

In other words, HBOS does not have the big institutional investors - pension funds, etc - to make a big stink with the FSA, the BOE and the Government over the scam and fall of the HBOS share price. There are basically millions of private shareholders who have lost X hundred or X thousand each but no really big single investors who have lost X tens of millions. Hence the thousands of small investors do not have the voice nor the clout to for the authorities to bring the scammers to trial.

Whoever did this knew exactly what they were doing. There will be huffs and puffs from the FSA and the BOE but nothing will happen.

We need people like this to be given 20 year sentences ala Enron et others.

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How come we never heard of 'DIRTY TRADERS' that talk the market up!

Don't tell me that has never happened. investors losing money on a bad tip!

...we have ...did we not see the case of red top journalists running a financial column who did, were sniffed out appeared in court ...and done .....probably not even allowed to contribute to the prison newspaper now....!..... <_<

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If anything comes from this' it will be hopefully:- 'MORE CREDIT TIGHTENING'.

Now all UK banks have have had a major WAKE UP CALL, they will start turning the screw on credit lending.

very very quickly!

They have two main things to balance

1. House price crash from stricter lending ( leading to defaults etc).

2. lack of liquidity from slack lending and higher lending rates. (lack of money leads to lack of confidence, the bank crashes)

HMMMMMMMMM

I wonder which of these two evils they will choose?

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WELCOME to our very first financial 'thought crime'

those perky rogue traders must be man-hunted for having a negative 'opinion' of a financial institution.

those malingering bastards. those utter c*nts.

they must be rounded up and put to death.

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They were only doing what people on here have been doing for months - saying banks are insolvent, doomed, etc. I suppose the only difference is that the opinions of the Rogue Traders actually carry some sort of weight.

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It has reached a point where banks no longer TRUST each other to lend between, why should the investor / depositor

The banks have set themselfs up for a fall. Trust, perception and liquidity is all they are after now. Hence mutibillion profit payouts, its just a lie to say we are strong.

No bank major bank will fail, it will be taken over / lied about (just think about the disclosure of banks borrowings from BOE).

The strongest perceived will survive ( I Hope).

LIES LIES and more LIES

Exactly what I was about to post - then thought I'd better check I wasn't echoing someone else's post, and saw that you'd already made the point.

However, it bears repeating, since it doesn't seem to have entered the tiny minds of those who cry "foul" when a bank run threatens. I read the DT article last night and was incensed. It made me think; who the hec are you trying to kid? I was nearly shouting at the newspaper - look, you morons, if the banks can't trust one another for overnight funds, why should depositors trust banks with their life savings?

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Thank God there are still remaining some people who are not stupid enough to believe the rubbish that comes out of the New Labour spin office each day.

The banks are in crisis, so they invent a story of bogus rougue traders, which then justifies the Bank of England tossing them an additional 11bn pounds of taxpayers money they proclaim not to need as they are reporting they have no problems.

Its all so very predictable as is the outcome.

I dont know the answer, but substantial savings in banks should be removed ASAP. If the Banks know one another are bordering on insolvency, so much so they will not lend to one another, then the public must be stark raving mad lending to the banks given they do not have access to the information the banks have on one another.

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Emails purporting to give share tips do the rounds all the time... and they get ignored. But last week HBOS borrowed 3 qtrs of a billion pounds at almost TEN PERCENT INTEREST! Smacks of desperation to me. Surely that was the cause of HBOS dropping like a stone.

I've never been one for conspiracy theories, but given that a run on Halifax would have been unthinkable - the economic effect could possibly have been worse than a major terrorist attack - the powers that be would have done anything to stop it. Suggesting that the 20% drop in share price was solely down to a malicious rumour, while pretty unbelievable, seemed to do the job of stopping the rout.

Am I being a tin-foil-hat wearer to think that scenario is more believable than a clearly weak rumour email causing the mess on Monday? It just doesn't add up...

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      • down 5% +
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