{"id":1532,"date":"2009-07-21T17:30:25","date_gmt":"2009-07-21T22:30:25","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=1532"},"modified":"2023-06-13T09:41:43","modified_gmt":"2023-06-13T13:41:43","slug":"manipulation-at-its-best-will-someone-prosecute-this-time","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/manipulation-at-its-best-will-someone-prosecute-this-time","title":{"rendered":"Manipulation at Its Best: Will Someone Finally Prosecute? Insights by Jonathan Lebed"},"content":{"rendered":"<p>I haven\u2019t seen what I witnessed in premarket trading yesterday in quite some time.\u00a0 Some BS company issued a \u201cpress release\u201d that they were going to make a tender offer for HAR at $49.50 per share.\u00a0 The name of the company was the Arabian Peninsula Group.\u00a0 This information was picked up by some Middle Eastern site (www.ameinfo.com) which in turn funneled it along to US based trading sites such as Fly On The Wall.<\/p>\n<p>The stock was trading about eight points higher in the premarket based on this bogus story.\u00a0 When I sat down at my trading station it was at $33 after closing the previous day at $25.\u00a0 Initially, I couldn\u2019t find any news as to why it was gapping up such a large amount.\u00a0 My assumption was that they were being acquired (flashback to 2007 when HAR was supposed to be taken private by GS for $120 per share).\u00a0 But as soon as I was able to spot the \u201cpress release\u201d it was evident that it was an attempt at manipulation.\u00a0 There was no official press release.\u00a0 There were quotes from a \u201cMr. Parker\u201d on the ameinfo.com website.<\/p>\n<p>I have no idea if the bad actors in this case will be prosecuted by the government.\u00a0 I tend to doubt it though.\u00a0 I also doubt that the NYSE broke the silly trades that were allowed to occur in the premarket based on the erroneous news reports.\u00a0 It always seems like the NYSE and NASDAQ halt trading when there is no legitimate reason to do so, halt trading after the manipulation has already caused damage (see DNDN April 29<sup>th<\/sup>) or fail to halt a stock that is clearly being manipulated.\u00a0 Not sure why the exchanges never seem to get this right.<\/p>\n<p><strong>Trading This Silly Setup<\/strong><\/p>\n<p>How as a trader can you take advantage of this market manipulation?\u00a0 First of all, there is no trade to be made in the premarket until a statement is issued by HAR.\u00a0 As much as you may want to short this thing in the\u00a0 30\u2019s there was a small risk that it would be acquired or the stock would be halted.\u00a0 As a trader you never want to be in a stock that has the potential to be halted.<\/p>\n<p>The first trade that can be made is once there is confirmation from the potential \u201cacquiree\u201d that there is no deal.\u00a0 Best case scenario is that you will hear from HAR while it is still up on the day so you can get short until it fills the overnight gap.\u00a0 HAR indicated it was not being acquired at 9:24AM.\u00a0\u00a0 It was trading at $26 at the time having erased most of the premarket gains already.\u00a0 But you clearly could have begun a small short position at the time.<\/p>\n<p>The second trade that can be made is the punishment trade.\u00a0 This is the stock being sold into negative territory once all of the premarket gains have been erased.\u00a0 The punishment trade was particularly effective in HAR yesterday as it had run up from $20 in the prior days and eventually would erase these gains as well.<\/p>\n<p><strong>Conclusion<\/strong><\/p>\n<p>As a trader I am constantly scanning the market for favorable risk\/reward trades.\u00a0 Very rarely do I get upset or unnerved by the shenanigans that takes place in the market.\u00a0 But it would certainly be nice if one day I saw a story in the WSJ about how one of these manipulators actually got nailed by the government.\u00a0 It would certainly be a breath of fresh air for the 99% of us who would like to believe we are on a level playing field.<\/p>\n<p>Don&#8217;t forget to <a href=\"http:\/\/twitter.com\/smbcapital\">follow us on Twitter!<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>I haven\u2019t seen what I witnessed in premarket trading yesterday in quite some time.\u00a0 Some BS company issued a \u201cpress release\u201d that they were going to make a tender offer for HAR at $49.50 per share.\u00a0 The name of the company was the Arabian Peninsula Group.\u00a0 This information was picked up by some Middle Eastern site (www.ameinfo.com) which in turn &#8230; <a href=\"https:\/\/www.smbtraining.com\/blog\/manipulation-at-its-best-will-someone-prosecute-this-time\" class=\"more-link\">Read More<\/a><\/p>\n","protected":false},"author":143,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-1532","post","type-post","status-publish","format-standard","hentry","category-steven_spencer_steves_blogs","no-post-thumbnail"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.1.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Manipulation at its Best: Will Someone Prosecute? | SMB Training<\/title>\n<meta name=\"description\" content=\"Stay up-to-date with the latest news and trends in trading. 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