They don't purchase software from Bill Gates, they manipulate their own.
Linette Lopez
Published 4:33 am, Wednesday, August 21, 2013
...Both Goldman's mistake yesterday (click here) — a system programming error that set incorrect price limits in a number of ticker symbols — and Knight's mistake — also a system programming error that sent algorithms buying high and selling low — highlight the fact that complex, high speed computer software has the power to set markets into a tizzy.
Here's how far Goldman's faulty trade, which were sent to options exchanges around the country, reached yesterday (from Bloomberg):
For Knight Capital, a programming error cost the firm its own existence. Goldman, on the other hand, says the error “would not be material to the financial condition of the firm."
The bank is known for having some of the most sophisticated and powerful trading technology on the Street, but we're talking about trading high speed in the options market here. As firms try to build programs to become the fastest and the baddest, say some experts, mistakes can be made....
The question is, did Tourre know the securities he was selling was going to fail? You mean he didn't? Really? The securities were horrible and he didn't know they were going to fail along with every other major institution on Wall Street. Give me a break.
Updated: Wednesday, July 24, 2013, 2:55 PM CDT
Published: Wednesday, July 24, 2013, 2:55 PM CDT
...The SEC sued Tourre and Goldman Sachs in 2010, (click here) accusing them of selling subprime mortgage securities in 2007 that they knew were doomed to fail. Goldman Sachs settled its end of the case, agreeing to pay $550 million. The SEC is seeking a declaration that Tourre violated securities laws. It wants unspecified penalties and damages and for Tourre to lose any profits he made from the deal.
Martens immediately questioned Tourre pointedly about a January 2007 email he sent to Laura Schwartz, a former executive at ACA Financial Guaranty Corp., a bond insurance company that invested in a package of subprime mortgage securities that collapsed in value with the U.S. housing market.
The email described the structure of the financial product and portrayed Paulson & Co. Inc., led by its billionaire president, John A. Paulson, as a sponsor of the securities, known as Abacus 2007-AC1.
"Was it false?" Martens asked.
"It was not accurate," Tourre responded, refusing repeatedly to answer the question yes or no.
"Is there a difference in your mind between something being inaccurate or false?" Martens asked.
Tourre said there was. He later added: "I had no intention to mislead anyone with this email."
Tourre, born in France, worked at Goldman Sachs after coming to the United States in 2000 to study. His state of mind is expected to play a critical role in whether a jury agrees with the SEC's claims that Tourre tricked investors, such as ACA Financial Guaranty, by making it seem that Paulson was counting on the mortgage-based securities to succeed when it actually was betting on them to fail....
Linette Lopez
Published 4:33 am, Wednesday, August 21, 2013
...Both Goldman's mistake yesterday (click here) — a system programming error that set incorrect price limits in a number of ticker symbols — and Knight's mistake — also a system programming error that sent algorithms buying high and selling low — highlight the fact that complex, high speed computer software has the power to set markets into a tizzy.
Here's how far Goldman's faulty trade, which were sent to options exchanges around the country, reached yesterday (from Bloomberg):
The trading may have affected about
400,000 contracts for companies such as JPMorgan Chase & Co.,
Johnson & Johnson and Kellogg Co., based on data for the 500 biggest
trades. Nasdaq OMX PHLX is reviewing a list of about 1,225 unique
contracts on 51 underlying stocks, according to its trader alert email.
About 240 September $103 put contracts
for the iShares Russell 2000 Exchange-Traded Fund traded at $1 at 9:32
a.m. New York time today, down from as much as $3.32 two minutes
earlier, data compiled by Bloomberg show. The next trade was executed at
$3.27 at 9:33 a.m.
The bank is known for having some of the most sophisticated and powerful trading technology on the Street, but we're talking about trading high speed in the options market here. As firms try to build programs to become the fastest and the baddest, say some experts, mistakes can be made....
The question is, did Tourre know the securities he was selling was going to fail? You mean he didn't? Really? The securities were horrible and he didn't know they were going to fail along with every other major institution on Wall Street. Give me a break.
Updated: Wednesday, July 24, 2013, 2:55 PM CDT
Published: Wednesday, July 24, 2013, 2:55 PM CDT
...The SEC sued Tourre and Goldman Sachs in 2010, (click here) accusing them of selling subprime mortgage securities in 2007 that they knew were doomed to fail. Goldman Sachs settled its end of the case, agreeing to pay $550 million. The SEC is seeking a declaration that Tourre violated securities laws. It wants unspecified penalties and damages and for Tourre to lose any profits he made from the deal.
Martens immediately questioned Tourre pointedly about a January 2007 email he sent to Laura Schwartz, a former executive at ACA Financial Guaranty Corp., a bond insurance company that invested in a package of subprime mortgage securities that collapsed in value with the U.S. housing market.
The email described the structure of the financial product and portrayed Paulson & Co. Inc., led by its billionaire president, John A. Paulson, as a sponsor of the securities, known as Abacus 2007-AC1.
"Was it false?" Martens asked.
"It was not accurate," Tourre responded, refusing repeatedly to answer the question yes or no.
"Is there a difference in your mind between something being inaccurate or false?" Martens asked.
Tourre said there was. He later added: "I had no intention to mislead anyone with this email."
Tourre, born in France, worked at Goldman Sachs after coming to the United States in 2000 to study. His state of mind is expected to play a critical role in whether a jury agrees with the SEC's claims that Tourre tricked investors, such as ACA Financial Guaranty, by making it seem that Paulson was counting on the mortgage-based securities to succeed when it actually was betting on them to fail....
