Code, scan, trade and profit. A new wave of computer enabled insider trading.

A new Wall St. scam

Rumors are circulating about a new Wall St. research service scam that goes like this…

Research reports are written with both recommendations and coded phraseology that enables pre-market manipulation.

The way it works – a report that gives recommendations also contains coded phraseology that programs trading bots on the exchange that ‘read’ the report and make various trades. Certain word, symbol and number combinations in the report are picked up by the bots who put on the trades based on the coded info.

In the following research report – the report spells out a recommendation – that will make the trades put on as the result of the previous report profitable.

Let’s say in January, the research says “We love tech. and big pharma” but hidden in the report is coded info that was picked up by trading bots who went long Co. X.

The following report recommends Co. X, making those pre-trades profitable (while containing new coded messages for the trading bots in anticipation of the next report).

This ‘research’ service is sold to traders for a hefty fee. It’s inside info that is virtually impossible to detect available to a firm’s best clients on a regular basis.

Simply buy the service and enable your computer software that ‘reads’ the research to pick up the code that will trigger what trades will be profitable when the next report is published.

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16 Responses to Code, scan, trade and profit. A new wave of computer enabled insider trading.

Blah blah | January 5, 2012 at 12:53 pm |

Believe it or not this kind of thing isn’t new
Unless I am mistaken messages have been encoded into documents
Year on year for time immemorial.

Getting the messages out of the text and proving wrong doing isn’t easy but on the
Otherhand you are
Limited to what can be encoded into the message by the nature of the
Document and size of said document.
Glenn Condell | January 5, 2012 at 10:51 am |

Sounds like Vixal4, the algorithmic trading program which stars in Robert Harris’s new book The Fear Index.
Capt. Ray | January 5, 2012 at 5:58 am |

…it’s a little like IPO-ing on quarterly basis.

I can see it work.
A lot more exiting then pm’s too, i mean; with computer programs and reports and stuff. you have to know who’s-who, engage in meetings, private telephone lines. The whole sjebeng.

Too bad I ain’t got the dough to roll.

This poor guy is left holding the bag.

( FWIW; I did put some coins in the bag. I’m the one holding it in the end anyway )
User2323 | January 5, 2012 at 5:56 am |

I think there are more clever/sinister ways of doing it, but I wouldn’t put this one past them. There are literally an infinite number of ways to give insider info like that, to the point that it’s not whether or not you get the insider info it’s how soon you get it.
ricin3000 | January 5, 2012 at 3:28 am |

Hmm, the algorithm seems quite poor, not what one would call AI in any way.

Just old fashioned security through obscurity thinking. Probably just a fad hoping to IPO soooooooooooooon. Before the front running is exposed or when the ponzi flaps.

One could also see it as a very retarded alternative approach to statistical analysis. Also screams snaky snaky oily.

And then they have a plug-in which enables betting against their customers
Happy Dick | January 5, 2012 at 2:13 am |

@MEarth … well put sir.
The “Borg”, the next level of evolution
Robert Mockan | January 5, 2012 at 2:08 am |

Although one can subscribe to an auto trading service, the service software might not auto read the codes for auto trading. A little Python patch can handle that. What a deal! Now we can all play criminals-are-US, and automate the entire rigging process. Isn’t IT wonderful? This adds meaning to saying “they hate US for our freedoms”! Especially when people on the other side of the world lose their pensions and savings because of USD hegemony exporting fraud.
snoop diddy | January 5, 2012 at 12:24 am |

We have the S&P200 and 100 in Australia.
It is based on Market cap = share price * number of shares.
As companies come and go from the S&P, portfolios are ‘rebalanced’,
actually ensuring that companies are brought high and sold low in managed portfolios.
That is why pension plans never actually show much of a profit even when we had the biggest share market boom in history.
Vonda Bra | January 5, 2012 at 12:18 am |

@ Max
Keiser, you´re makin me dizzy!!!!

VonOlev
snoop diddy | January 5, 2012 at 12:15 am |

Penny stocks – The anatomy of a pump and dump
http://www.youtube.com/watch?v=cDpPlrHgquM
Apocalypto | January 4, 2012 at 11:36 pm |

@IAMSLATTERY

$33/oz for your crusty silver bars? No thank0-you, Mr. Spam!

I can get brand new, beautiful bars direct from First Majestic for $32.50.

Put that in your crack pipe and take a toke.
Al Kyder | January 4, 2012 at 11:09 pm |

I am stunned by this.

As if the system is not already fragile enough.

This creates a whole new battle field like environment.

In the end luddites will most likely smash the Machine.

@ Mother Earth

Here is an image for your site.
I took some liberties with your avatar
http://www.archive.org/download/Smotherearth/Smotherearth.png
Dementia 5 | January 4, 2012 at 10:56 pm |

RIGGED!!
Dan | January 4, 2012 at 10:24 pm |

It’s just simple regex. Probably been going on since the proliferation of computers.
IAMSLATTERY | January 4, 2012 at 9:42 pm |

Really?

This is a new idea?

Wow I figured that was how things worked all along and why Max is 90% reality (you are the greatest of teachers – thank you).

You really never saw anything like that when you were a trader Max?
Huh.
Mother Earth | January 4, 2012 at 9:37 pm |

It’s the machine coming to life, the carbon credit handshake that bypasses humans in every way, to ensure feeding the carbon industrial machine..Possibly the first instance of true emergent artificial intelligence as it is the control system of the feedstock for the machine that managed to automate itself.