University of Michigan sells inside information, screwing small investors

Section:

By Jonathon M. Trugman
New York Post
Sunday, June 16, 2013

http://www.nypost.com/p/news/business/getting_schooled_Tnk6T9EkMg8sOYmDK...

A university or college should never engage in cheating, but that is exactly what the University of Michigan is doing to individual investors in the markets.

Last week the university admitted that it releases market-moving consumer-sentiment data to business partner Thomson Reuters' high-paying clients five minutes before everyone else gets the information.

And the data are given to higher-paying high-frequency trading clients two seconds earlier than that.

It's all quite legal, but it certainly isn't fair. And if it isn't fair, then it isn't a free market -- and that's the point.

... Dispatch continues below ...



ADVERTISEMENT

Buy metals at GoldMoney and enjoy international storage

GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, ­taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit:

http://www.goldmoney.com/?gmrefcode=gata



Cheating isn't rewarded in school, and schools -- which are enterprises chartered to do the public good -- shouldn't be enabling cheating in the markets.

No one should: not the exchanges, market makers, research firms, or any other players. Just because the University of Michigan can develop powerful economic-research surveys, it does not gain the right to sell its market-moving research to some high-frequency traders in advance for a hefty fee plus "revenue enhancements."

Presumably Michigan Democrat Sen. Carl Levin, who zealously has raked New York's top bankers, Jamie Dimon and Lloyd Blankfein, over the coals more than a few times, is now prepared to look in his own backyard.

Which raises another point: Why haven't the exchanges and high-frequency front-runners been dragged in front of the cameras?

Is it coincidence that high-frequency firms (which are typically small broker-dealer operations) generate the highest amount of trading fees for the exchanges and Wall Street?

These shops now rule The Street and, apparently, Washington. With their ultrawide bandwidth servers and API code-writing elves, they know what we will know two seconds before we do!

And that's all they need to act, sending out orders at hyperspeeds and sometimes reaping tens of millions of dollars in a day.

But there's another part to this problem: market structure.

Over the past 10 years our markets have become more and more of a rigged, pay-to-play Pandora's box. We do not have the fairer, better markets that Washington and the exchanges keep bragging about. Sure, they're the best in the world. But fairer than they were 10 years ago? No way.

Unfortunately, it starts with the exchanges themselves -- the direct overseers of billions of dollars in trades per minute.

For the right (very large) price, you can buy a spot and place your server at the exchange, which entitles and enables you to receive info and place trades ahead of others.

Again, we're talking about milliseconds, but that's all speed traders need to execute thousands of bids and asks.

For a large fee the Chicago Mercantile Exchange, Nasdaq, and the New York Stock Exchange -- which are actually regulatory entities as well as public for-profit companies -- permit those with the cash to trade ahead of those with the six-pack. The small investor is getting shafted by the exchanges.

Since the University of Michigan is unlikely to step up and do the right thing, maybe New York can once again lead.

It's time for the exchanges to voluntarily disseminate all information at the exact same time and disallow server farms on exchange property if they can't guarantee equal data-delivery times.

A school spokesperson said on Thursday, "Sponsors have always been provided results of surveys before [the results are] released to the public."

Sounds like a defense for a kid who gets the answers before the final exam.

* * *

Join GATA here:

Liberty Mastermind Symposium
Double Tree Hotel, Dallas-Fort Worth Airport
Friday-Saturday, June 28-29, 2013

http://www.libertymastermind.us/

* * *

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

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

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

http://gata.org/node/wallstreetjournal

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:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16



ADVERTISEMENT

How to profit in the new year with silver --
and which stocks to buy now

Future Money Trends is offering a special 16-page silver report with our forecast for 2013 that includes profiles of nine companies and technical analysis of their stock performance. Six of the companies have market capitalizations of less than $800 million and one company has a market cap of only $30 million. The most exciting of these companies will begin production in a few weeks and has a market cap of just $150 million.

Half of all proceeds from the sale of this report will be donated to the Gold Anti-Trust Action Committee to support its efforts exposing manipulation and fraud in the gold and silver markets.

To learn about this report, please visit:

http://www.futuremoneytrends.com/index.php?option=com_content&id=376&tmp...