SEC charges E*Trade, 5 others, for front running(reuters.com)
reuters.com
SEC charges E*Trade, 5 others, for front running
http://www.reuters.com/article/marketsNews/idINN0530515020090305?rpc=44
5 comments
Seems like a very small fine. I'm sure eTrade made a ton more money than the 34 million they were charged.
It seems to me that class action suits would be next, since customers would have to had to pay more for stocks based on these transactions.
I doubt it. E*Trade's traders ("specialists") on CHX & Cinci weren't really making that much.
They are getting hit hard for this. Their stock has lost over 13% of its value today.
Who do they think is fooled by neither admitting or denying the allegations?
I got a letter from the Office of Thrift Supervision today confirming receipt of my complaint about E*TRADE Bank. Glad to know I'm not the only one who hates them.
Front running is the illegal practice of a stock broker executing orders on a security for its own account while taking advantage of advance knowledge of pending orders from its customers. When orders previously submitted by its customers will predictably affect the price of the security, purchasing first for its own account gives the broker an unfair advantage, since it can expect to close out its position at a profit based on the new price level. Front running may involve either buying (where the broker buys for their account, driving up the price before filling customer buy orders) or selling (where the broker sells for its own account, driving down the price before filling customer sell orders).