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):
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.
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.
By
LARRY NEUMEISTER, Associated Press
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....