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becoming mainstream. Rather than making the moves necessary to assure that their quotes were accurate and in line, they just assumed that it would be a short period of time until their regulatory allies would squelch the infidel SOES bandits. |
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As time passed and SOES continued, the market makers began to lobby their friends at the NASD to enact rules and regulations to put SOES traders out of business. The market makers started the fight and had targeted SOES traders as the enemy, with me as ground zero. |
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What do you do when a self-regulatory organization like the NASD decides to put your firm out of business? In my case, I had no desire to risk my career for an ideal. Nor did I wish to fight an economic battle with the NASD. It had virtually unlimited funds available, which included even my dues and fees, as well as the securities law of the land to use and interpret as it saw fit. I had been in the industry for 20 years and had been a member of the AMEX, the NYSE, and the NASD; and I had made a significant livelihood in this industry. The NASD's standing threat to anyone who contests the validity or the outcome of their beauty contest is to bar the objector from the securities industry for life. The NASD has the right to sentence the extremist to economic death under its rules because the NASD had been designated a self-regulatory organization with the right to police and regulate the "misconduct" of its members. |
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Becoming a renegade against the industry in which I had made my living did not come easy. I think the primary motivating factor was the treatment my firm and I received during and after the crash of 1987. I realized then that there was absolutely no camaraderie or spirit of mutual help and concern; the industry was more than happy to sacrifice a few small firms in a rush to maintain the facade of strength and legitimacy of its system. I found it interesting that not one major firm failed in the crash of 1987, which was even more severe than the one in 1929. Apparently, the system worked for the chosen few; the investing public had to rely on the remorseless law of gravity. |
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