Norwegians take big broker's trading algos for an expensive ride


Norwegian Day Traders Cleared of Wrongdoing

By Michael Stothard
Financial Times, London
Wednesday, May 2, 2012

Two Norwegian day traders who outwitted the automated trading system of a big US broker have been cleared of all wrongdoing by the country's highest court.

The two men were handed suspended prison sentences for market manipulation in 2010 after they worked out how the computerised system would react to certain trading patterns -- allowing them to influence the price of low-volume stocks.

Their appeal against that ruling was upheld by the Norwegian Supreme Court on Wednesday, which cleared them of market manipulation. The verdict will please the trading community in Norway, which had come to view the duo as Robin Hood figures, beating the big financial houses at their own game.

... Dispatch continues below ...


Sona Discovers Potential High-Grade Gold Mineralization
at Blackdome in British Columbia -- 13.6g over 1.5 Meters

From a Company Press Release
November 22, 2011

VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling.

"We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company."

Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered.

For the company's complete press release, please visit:

Two expert witnesses testified that the activities of Svend Egil Larsen and Peder Veiby were common market practice. The defendants also argued that they were making the market more efficient by exploiting a flawed system.

Mr Larsen told the Financial Times that he was still getting the better of algorithmic trading systems today. "Just the other month UBS forgot to set a bottom limit on one of their algos and I got some stocks for cheap," he said. "They even called me afterwards and asked me to reverse the trade!" He declined to do so.

The case involved Timber Hill, a unit of US-based Interactive Brokers. Prosecutors had argued that Mr Larsen and Mr Veiby "gave false and misleading signals about supply, demand, and prices" by manipulating several Norwegian stocks through Timber Hill's online trading platform.

But Mr Larsen said that the system was so flawed that "any rational investor could have done what we did in the same open and transparent way." The court said that the transparency of their trades was one reason for their acquittal.

Before the ruling both Mr Larsen and Mr Veiby had already been found innocent in the court of public opinion. "The case against them was one of the most unpopular I have ever seen in Norway," said Sverre Nilsen, a reporter at local financial paper E24, who was following the trial.

Mr Nilsen said that this partly reflects the unpopularity of algorithmic trading systems that some feel gives big financial houses an unfair advantage, but also the charisma of Mr Larsen, in particular, who was able to come across as a lovable rogue taking on the powers that be.

Mr Veiby and Mr Larsen placed thousands of trades from late 2007 to early 2008. Mr Larsen said that problems arose when he was "bored in Florida" waiting for his wife and children to wake up and so placed a number of larger trades that ended up attracting attention.

The eventual court case in 2010 came soon after the so-called "flash crash" in May of that year, when a single algorithm triggered a plunge in US stocks prompting growing scrutiny of automated trading systems.

Mr Larsen's lawyer, Halldor Tjoflaat, said he was pleased with the verdict but disappointed that the court did not use it as an opportunity to clarify the guidelines for the Securities Trading Act on market manipulation.

* * *

Join GATA here:

Las Vegas Money Show
Caesar's Palace, Las Vegas
Monday-Thursday, May 14-17, 2012

Committee for Monetary Research and Education
Spring Dinner Meeting
"Money and the Corporate State"
Union League Club, New York, N.Y.
Thursday, May 17, 2012

Vancouver World Resource Investment Conference
Sunday-Monday, June 3-4, 2012
Vancouver Convention Centre East
Vancouver, British Columbia, Canada

Standard Chartered's Earth Resources Conference
Wednesday-Thursday, June 20-21, 2012
J.W. Marriott, Hong Kong

Hong Kong Gold Investment Forum
Monday-Wednesday, June 25-27, 2012
Renaissance Harbour View Hotel, Hong Kong

New Orleans Investment Conference
Wednesday-Saturday, October 24-27, 2012
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

Or by purchasing a colorful GATA T-shirt:

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

To contribute to GATA, please visit:


Prophecy Platinum (TSXV: NKL) and Ursa Major Minerals
Sign Combination Agreement

Company Press Release
Friday, March 2, 2012

VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) and Ursa Major Minerals Inc. have signed a binding letter of agreement for a business combination through a proposed all-share transaction. In doing so Prophecy and Ursa have acted at arm's length and the transaction has been negotiated at arm's length.

Prophecy will issue one common share in exchange for every 25 outstanding common shares of Ursa. Ursa options and warrants will be exchanged for options and warrants of Prophecy on an agreed schedule.

Prophecy's offer represents a value of about $0.15 per each common share of Ursa based on Prophecy's share price of $3.70 as at March 1, representing a premium of 130 percent to Ursa's March 1 closing price of $0.065.

Prophecy is to subscribe for $1 million common shares of Ursa by way of private placement financing at $0.06 per share, subject to regulatory approval. Upon placement completion, John Lee and Greg Hall, current Prophecy directors, will be appointed to Ursa's board.

Prophecy thus will become a mid-tier resource company with a robust and diversified pipeline of platinum nickel projects, including:

-- The fully permitted open-pit Shakespeare PGM-Ni-Cu mine close to Sudbury, Ontario, infrastructure with near-term production capabilities.

-- The flagship Wellgreen (Yukon) PGM-Ni-Cu project with more than 10 million ounces of Pt-Pd-Au inferred resource. Drilling is under way and a preliminary economic assessment study is pending.

-- Manitoba's Lynn Lake Ni-Cu project with more than 262 million pounds Ni and 138 million pounds Cu measured and indicated.

For the complete announcement, please visit Prophecy Platinum's Internet site here: