Reply #16: Trading Scandal May Strengthen Stock Exchange (I've heard THAT

[54anickel]

line so many times!!! From the money guy trying to get me back into the markets. At that time he was talking about the little Mutual Fund market timing scandal. Sh*t, we haven't seen the fallout yet. Back then I told him I thought that was just the tip of the iceberg - look what's come out since. I don't think we are near the end yet. Probably won't ever truely get there. JMHO


http://www.nytimes.com/2005/04/14/business/14place.html

A scandal can destroy an institution. Or it can renew it. The good news for the New York Stock Exchange is that the scandal that led to the indictments of people who had been extremely powerful on the floor of the exchange bears a close resemblance to the one that shook the Nasdaq stock market a decade ago.

In the Nasdaq case, the scandal forced the market to clean house at the top and to institute reforms that ended practices that had enabled brokers to systematically take advantage of their customers. The result was a far better market, one that was able to withstand the intense public scrutiny that arrived a few years later when the technology stock boom cast a spotlight on the Nasdaq.

In both scandals, powerful people had created an environment where it was deemed acceptable for brokers to make small amounts of money at the expense of their customers, through trading practices that no customer could hope to spot. When regulators first questioned the practices, many on Wall Street reacted with shock, arguing in essence that that was the way it was always done.

The indictment of 15 former specialists - the traders at the heart of the market whose job it is to maintain fair markets for customers - could make this the largest criminal case to come out of America's premier stock exchange since the 1930's, when the exchange's president, Richard Whitney, was imprisoned for fraud.

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