International Fraud a Foul

Lego_Millennium_Falcon_from_FlickerSeveral days ago, CitiGroup settled on penalties (reportedly $7 Billion) for wrong doings. What will come of this is hard to say. Perhaps the business schools will realize that monolithic corporations encounter too much risks to be viable.

As for fraud and how it might affect a startup and entrepreneurs, it is not always obvious. We, of course, know of the random fraud by con-men hawking vaporware; there is even the occasional CXO f’ing friends and family, and the even rarer CXO committing consumer fraud.

A broader fraud internal to the system is worst. Yes Bernie Madoff is the classic example, but a fraud that spans international borders, internal safe guards, buckles regulatory framework, and sends waves throughout the system, that is worse. Such is the fraud within Citicorp.

Banamex ATM in  Barra de Navidad, Jalisco complements of tomzap.com

Banamex ATM in
Barra de Navidad, Jalisco
complements of tomzap.com

In 2001, Banamex was acquired by Citigroup. From 2001 to 2014 Citigroup tried to get the Mexican bank group to modernize so it could place modern safety checks in place. It did not happen. Late in 2013, Citigroup realized a serious issue. Early in 2014, it made it known to the world that $400 million was missing. By May it had no choice but to fire eleven executives without PENSION! This issue will cause Citigroup and the rest of the industry regulatory issues for years.

If that was not enough on June 11, 2014, the New York Times reported suspicions on large stockpiles of copper and aluminum sitting at port. The suspicions are that a Chinese company pledged the same stockpiles as collateral for multiple loans. The division with this issues is Citic Resources, part of the state-controlled conglomerate Citic Group. This is worrisome since China has an estimated total outstanding credit of more than 220 percent of gross domestic product last year — up from 130 percent in 2008. The worry, of course, is how many others have done this.

image complements of flicker Ingot in fort Lauderdale, Fl.

image complements of flicker
Ingot in fort Lauderdale, Fl.

The report said Decheng Mining was suspected by the authorities of having pledged the same stocks of the metals — about 100,000 tons of aluminum and 2,000 to 3,000 tons of copper — as collateral for multiple loans, amassing bank debt exceeding 1 billion renminbi ($160 million). Phone calls and emails to Decheng’s parent company, Dezheng Resources, went unanswered on Wednesday.

 


Meet Benedict Van, the con man of Silicon Valley
http://venturebeat.com/2012/04/10/silicon-valley-con-man/
Silicon Valley Hustle: Former Motionloft CEO Accused Of Defrauding Investors
http://techcrunch.com/2013/12/30/motionloft-jon-mills/
Silicon Valley tech bigwig arrested for fake barcode Lego scam
http://m.digitaltrends.com/home/silicon-valley-tech-bigwig-arrested-for-fake-barcode-lego-scam/#!NysRD

Banamex Said to Snub Citigroup Oversight as Fraud Mounted – Bloomberg
http://mobile.bloomberg.com/news/2014-03-08/banamex-said-to-snub-citigroup-oversight-as-fraud-mounted.html
Citi Fires 11 More in Mexico Over Fraud – NYTimes.com
http://dealbook.nytimes.com/2014/05/14/citigroup-says-it-has-fired-12-in-mexico-over-fraud/
Banks Fear Missing Collateral in China – NYTimes.com
http://dealbook.nytimes.com/2014/06/11/lenders-fear-spread-of-chinese-commodities-fraud-case/?_php=true&_type=blogs&_r=0
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RIP Springpad

The demise of a startup venture is always disappointing. In the case of SpringPad, it was continously compared with it’s large competitor EverNote. Even today (July 7, 2014) it’s domain no longer responses to pings. ping: unknown host springpad.com

OneTreeFrog_1stPostThe announcement was made on May 23, 2014 (See below). Within hours, there were regrets and rumors. Days later, list of alternativesacquire-hire, and Five (5) Pre-morteum lessons (list below) were in writing. 11 days later, multiple alternatives were available on a public spreadsheet, and Microsoft had tools to port data off of Springpad. On the last day of official operations, June 25, 2014 – warning notices were re-issued by the press.

With all this noise, you’d think users would have gotten the message. No, some in the press did not. Odds are handful of the 5 million users did not.

Announcement: Springpad is Shutting Down on June 25th
Posted on May 23, 2014, by Katin
https://springpad.com/blog/2014/05/announcement-springpad-shutting-down/

We are very sorry to let you know that Springpad will be shutting down on June 25th. At that point Springpad.com will no longer be available, all online and sync features of the mobile apps will stop working, and your personal data will no longer be stored on our servers.

Please know that it is our top priority to help you during this transition. Amidst current rumors we wanted to confirm the news and give you all of the information possible at this time. We are putting the final touches on a new export tool that will allow you to take your data with you. This will include an improved backup file that you can save and use to reference your notes in the future in addition to the option to migrate your data.

In the coming days, we will make the export tool available to all users and developers and will communicate more news about our shutdown on our blog, via email and on Springpad.com. You will then have until June 25th to export or migrate your data.

 

RIP Springpad. We will miss you
May 23, 2014
http://www.techtimes.com/articles/7463/20140523/evernote-rival-springpad-shutting-down.htm
Springpad, a productivity app similar to Evernote and Pinterest, is planning to throw in the towel as it admits defeat against its cloud-based notes rivals.
Google might be acquiring Springpad in acqui-hire deal | BetaBoston
May 23, 2014
http://betaboston.com/news/2014/05/23/google-might-be-acquiring-springpad-in-acqui-hire-deal/


springpad_Postcard61Springpad App Alternatives: Boston Startup Springpad Engineers and CPO to Join Google | BostInno
May 27, 2014
http://bostinno.streetwise.co/2014/05/27/springpad-app-alternatives-boston-startup-springpad-engineers-and-cpo-to-join-google/
Five Springpad engineers to join Google as Boston-based personal organizer app shuts down – Boston Business Journal
May 27, 2014
http://m.bizjournals.com/boston/blog/startups/2014/05/five-springpad-engineers-to-join-google-as-boston.html?r=full
Five Lessons for Consumer Tech Startups in Springpad Shutdown
May 28, 2014
http://www.xconomy.com/boston/2014/05/28/five-lessons-for-consumer-tech-startups-in-springpad-shutdown/
  1. East Coast vs. West Coast
  2. Product-market fit
  3. Revenue model
  4. Business issues
  5. Distribution and user acquisition
This Spreadsheet Is a Definitive Guide to Springpad Alternatives
Jun 3, 2014
http://lifehacker.com/this-spreadsheet-is-a-definitive-guide-to-springpad-alt-1585070602
Microsoft releases OneNote Clipper for Chrome, Springpad-to-OneNote migration tool
Jun 9, 2014
http://www.pcworld.com/article/2360753/microsoft-releases-onenote-clipper-for-chrome-springpad-to-onenote-migration-tool.html
Today’s the last day to download your Springpad data
June 25, 2014
http://www.itworld.com/consumerization-it/424590/todays-last-day-download-your-springpad-data
8 unwritten rules of job searching
http://www.sacbee.com/2014/07/01/6526642/8-unwritten-rules-of-job-searching.html
These people did not get the memo.
springpad2This Startup Had Over 5 Million Users And A Great Product. Then It Folded
The (somewhat) surprising demise of the popular organizing app Springpad–and what happened next.
Published June 29, 2014
http://www.fastcompany.com/3032341/most-creative-people/this-startup-had-over-5-million-users-and-a-great-product-then-it-folde

politico.com – How to Lose $100 Million (on the web)

How to Lose $100 Million

The undoing of Tina Brown.

Image from Bruce Feiler's blog.  Shoeless in New York Tuesday, June 12, 2007

Image from Bruce Feiler’s blog.
Shoeless in New York
Tuesday, June 12, 2007

By LUKE O’BRIEN

May/June 2014

http://www.politico.com/magazine/story/2014/05/tina-brown-how-to-lose-100-million-105907.html

This is a seven (7) page story. It is about the salacious nature of an industry in flux — which includes Newsweek, Newsweek the online version, and the Daily Beast. I don’t expect anyone to read it, unless your alone this Sunday — having coffee — and have about 2 hours to kill.

NOTE: Tina was the last editor-in-chief of the last print issue (Dec. 2012) of Newsweek, before it was revived via a sale (of the magazine) and went back into print in March of 2014

Pops open to wikipedia.

More details on wikipedia.org

Not enough on Tina? Post-Tina via the [NY Magazine] six (6) pages

RIP Turning Out the Lights – blog.wsj.com

turn_off_lightsBeing an entrepreneur means you have to do alot of background work – constantly checking, and re-checking the premise of the business. And as I’ve learned, just because you are making money, don’t sit still – because there may be another opportunity staring you in the face.

With the same force of will, it is always important to look for other lessons. And while it’s good to hear these tales, often finding them seems like a passing theme. This is why I was overjoyed when I found a 2009 series from the Wall Street Journal called Turning Out the Lights.

There is one story in 2014, one in 2012, and the remainder are from 2009. Below is a list of the companies and their product category. The links available lead to the VentureWire column story. The column is now part of the Private Equity & Venture Capital news service – which runs an active website. Lastly a reminder that many of the companies went down because of the Real Estate Bomb of 2008.

Turn Out the Lights. .OR. Turn Off the Lights.

Is it historic or idiomatic?

2014dark_forest

Stipple Shuts Down; VC Backers Included Floodgate, Kleiner Perkins

  • Image-tagging advertising startup Stipple Inc. has called it quits, shutting its doors less than 18 months after raising capital at a valuation just south of $25 million.
  • Stipple announced it was ceasing operations on its Twitter account.
  • At the time the company said it had tagged more than 80 million images and had more than 140 brand partners (…)

2012

No Playing: Signs Of Upheaval At Rivet Games

  • Backed with $15 million in venture funding and led by a former Playdom executive, social gaming company Rivet Games has abruptly shuttered one of its games amid signs of upheaval at the start-up.
  • The San Francisco-based company posted a message on its Pet Tales page on Facebook, stating: “Pet Tales has moved on. We are truly sorry that we are no longer able to keep Pet Tales going. We hope to be able to bring it back in the future. Thank you all so much for playing!”
  • Shortly after, the community forum on Rivet Games’ site lit up with posts from users who play the virtual pet game, wondering why the company had shut it down, why they weren’t given any warning and whether they would get refunds for money spent to buy virtual goods.
  • (No word on any success in this story.)

2009

The last story post in 2009 lists all the companies it made note of in 2009. To access the stories you can search the website for the company name, or browse through the category listings for the column Turning Out the Lights. I’ll add a few selected story links as well.

Turning Out The Lights: Transoma Medical, Onetime IPO Hopeful

  • Transoma Medical Inc., which raised more than $40 million in venture capital and had filed to go public in late 2007, has shut down after running out of money.
  • (No word on how the announcement was made.)
  • The St. Paul, Minn., company couldn’t attract new investors or acquirers even though its newest cardiac monitor, which received 510(k) clearance in February, had won some fans among physicians who treat heart-rhythm conditions.

Medical, Health & Drugs

  • Allux Medical Inc., Menlo Park, Calif. – devices for treating upper airway and dermatological inflammatory diseases.
  • Archus Orthopedics Inc., Redmond, Wash. – a device for an alternative to spinal fusion surgery for the treatment of leg and back pain caused by moderate-to-severe degenerative lumbar spinal stenosis
  • Argolyn Bioscience Inc., Durham, N.C. – a peptide drug developer
  • Aspen Medtech Inc., Bellevue, Wash. – a medical device field to be determined.
  • Cogentus Pharmaceuticals Inc., Menlo Park, Calif. – a pill designed to provide protective cardiovascular benefits while reducing gastrointestinal side effects associated with anti-platelet therapy.
  • DiObex Inc., San Francisco – diabetes drug
  • Dynogen Pharmaceuticals Inc., Waltham, Mass. – a drug
  • Innovative Spinal Technologies Inc., Mansfield, Mass. – spinal-surgery device
  • OmniSonics Medical Technologies Inc., Wilmington, Mass. – an ultrasound technology that breaks up blood clots
  • Pegasus Biologics Inc., St. Paul, Minn. – (summary unclear about business)
  • Therative Inc., Livermore, Calif. – aesthetics device for acne treatment

Computers, Networks, Communications & Robotics

  • Autonomic Networks Inc. (Formerly known as Vernier Networks), Mountain View, Calif. – network access control products
  • BrightScale Inc. (Formerly known as Connex Technology), Sunnyvale, Calif. – The maker of chips used for video processing.
  • Cswitch Inc., Santa Clara, Calif. – communications semiconductors
  • Hammerhead Systems Inc., Mountain View, Calif. – a data-switching company
  • LucidEra Inc., San Mateo, Calif. – on-demand business intelligence
  • LV Sensors Inc., Emeryville, Calif. – maker of semiconductors, micro-electromechanical devices that were to be used as wireless sensors in automobiles.
  • MetaRAM Inc., San Jose – semiconductor designed to reduce the costs of servers and workstations by up to 90%
  • Nanochip Inc., Fremont, Calif. – memory circuits maker
  • Nevis Networks Inc., Mountain View, Calif. – protect local-area networks (LANs) from unauthorized users
  • nTag Interactive Corp., Boston – digital name tags that can communicate with each other wirelessly
  • OQO Inc., San Francisco – sophisticated pocket-sized PCsOQO
  • PulseWave RF Inc. – power amplifier chips for cellular base stations
  • Recordant Inc., Alpharetta, Ga. – sales analytics technology
  • SiCortex Inc., Maynard, Mass. – A high-performance computing
  • Silicon Navigator Corp., Cupertino, Calif. – electronic design automation software for chipmakers
  • TallyGenicom LP, Chantilly, Va. – Printing products
  • Woven Systems Inc., Santa Clara, Calif. – maker of a 10-gigabit Ethernet switch
  • Yoomba Inc., Menlo Park, Calif. – VoIP technology maker

Internet & Web

  • Coghead Inc., Redwood City, Calif. – a Web application company
  • Kadoink Inc., San Francisco – mobile content delivery and advertising platform
  • ManiaTV Inc., Los Angeles – produce Internet TV shows
  • NebuAd Inc., Redwood City, Calif. – online behavorial tracking
  • Ortega InfoSystems Inc., Fremont, Calif. – remote viewing of security facilities through a Web browser
  • ProQuo Inc., San Diego – filter out people’s junk mail, while continuing to receive the offers they want.
  • SafePage Corp., Menlo Park, Calif. – “secure personal portal” using online “widgets.”
  • SkyWi Inc., Fort Worth, Texas – Originally VOIP, but to dial-up and DSL Internet service
  • SplashCast Corp., Portland, Ore. – lets people watch television shows within social networking sites
  • Sotto Wireless Inc., Bellevue, Wash. – stealthy wireless service provider
  • TeeBeeDee Inc., San Francisco – social networking Web site for people over age 40
  • Tipjoy Inc., Cambridge, Mass. – Internet tip jar for digital content
  • Trusera Inc., Seattle – health Web site

Other

  • Advanced Power Projects Inc., Fremont, Calif. – make power plants more efficient.
  • Elephant Pharmacy Inc., Berkeley, Calif. – the operator of health and wellness stores
  • Expresso Fitness Inc., Sunnyvale, Calif. – interactive stationary bicycle
  • GreenFuel Technologies Corp., Cambridge, Mass. – an algae greenhouse designed to use carbon dioxide emissions from a cement plant to create biofuel
  • TeachFirst Inc., Seattle – educational training company
  • Ugobe Inc., Eagle, Idaho – The maker of the Pleo robotic dinosaur – a lifelike, interactive toy (youtube)

    Pleo

    The interactive Pleo, robotic & life-like.

  • Ultreo Inc., Redmond, Wash. – battery-powered toothbrush that used ultrasound waveguide and sonic bristles
  • Verified Pass Identity Inc., New York – provider of faster airport security lines for approved travelers, which did business as Clear

 

theverge.com – Everpix: Out of the Picture

Pops to StartupOver.com

Picture credit: startupover.com

(Corrections made on May 26, 2014 – 1:00am)

This is an easy story.

It’s everything a VC wants to see.

  • A young team with previous startup success
  • A hot market segment – digital photographs
  • Critical acclaim from the segment press
  • Incredibly good features – that users raved about
  • Early acquisition attention from larger better-funded startups
  • $1.8 million in Seed Capital
  • An 18 month runway after funding
  • Double the conversion rate (12.4% vs 6%) of the industry average
  • 50+% user retention

What went wrong?

  • Too much time on technical details
  • Not enough user signups (55,000 users/8,600 paid)
  • Expensive infrastructure – $35,000/month for AWS

I also want to add, I ran into these guys at some event. They were a bit snooty. I could have been the moment.

I’m also adding – as one of the members said, “It succeeded in every possible way, except for the only way that matters.”

Out of the picture: why the world’s best photo startup is going out of business
http://mobile.theverge.com/2013/11/5/5039216/everpix-life-and-death-inside-the-worlds-best-photo-startup
Nov. 5, 2013
How A $35,000 Bill From Amazon Helped Put A Startup Out Of Business
http://www.businessinsider.com/how-a-35000-amazon-bill-ended-everpix-2013-11
Nov. 5, 2013
Everpix_CEO_Pierre_LatourThe Everpix Story – w/ former CEO Pierre Latour – (Video: 56+minutes)
http://new.livestream.com/500SAcc/everpix
Tue Jan, 28 2014
NOTE: In this video, it appears Pierre is still in self-denial.

Facebook Phone – An HTC “First” drags down Execs

gigaom.com_htc-first-featured

This story is from a blog that I update occasionally.

This is a story about how betting on Facebook ended careers. In case you missed this one, HTC decide to build a “First” Facebook phone. They got AT&T to sell it. They offered special pricing… READ ABOUT IT

HTC “First” drags down HTC Executives and Facebook Cache’
http://diefacebook.blogspot.com/2013/05/htc-first-drags-down-htc-executives-and.html
The CNET story includes:

That departure continues an unsettling trend for HTC. Chief product officer Kouji Kodera, who led HTC’s general product strategy, left last week, according to The Verge. Vice president of global communications Jason Gordon recently exited the company after a seven-year stint. Other outgoing executives include global retail marketing manager Rebecca Rowland, digital marketing director John Starkweather, and product strategy manager Eric Lin.

Flash Crash of 2010 – More

Monday I talked about the Flash Crash of 2010, and promised more information. Here it is.

Whats Here

nanex.net_PercDrop1

This chart is from nanex.net. It shows the obvious issue with the event. They have good evidence this was intentional.

The compiled evidence, in my opinion, is damming. It is also very long. I don’t expect anyone to read the entire thing in one sitting – unless it’s Sunday and you have several hours to devote to this. I want to mention I was on the couch watching the Flash Crash as it happened. To me – at the time – it was surreal.

  • Where it Starts – This is not an isolated event, humans are involved.
  • The Trading System – The trading system, like the government, can be gamed.
  • Prior to the Incident – Market conditions had to be in place for this to happen.
  • NYSE Circuit Breakers are Off – Only humans are in control of any major market move.
  • Market Capitulation – Actions taken when humans give up on the market.
  • Who lost money.
  • The FLASH CRASH on CNBC – The train wreck in action.
  • The FLASH CRASH Special Report – End of day round-up of events.
  • The FLASH CRASH day on CNBC – CNBC adds context to the day, in six (6) segments.
  • FOX News Version during the crash
  • The FLASH CRASH CNBC Documentary (- 3+ hours) – May 6th 2010 CNBC Stock Market Flash Crash Full Video Coverage DVD #1

POST Event Anaylze and Confessions

  • Jim Cramer with Jimmy Fallon on the Flash Crash – This is a few days after the event.
  • Trader Relives Nightmare Three Years Later
  • Professor Larry Glosten present the academic analyze.
  • A HFT (High-frequency trader) confesses to some actions.
  • What caused the flash crash of 2:45? – A European analyze of the incident. However, it appears the panel did not know much — three years after the fact.

Where it Starts

The bulk of the story that surrounds this is “Artificial Intelligence”. It starts with high-speed computers that “try” to predict the direction of a stock. And of course, since humans programmed them, all they are looking for is – will prices go up or will prices go down.

Add to this that computers can interpret public “news”. For instance, if a price influencer (like a CEO) says something that can trigger a human reaction (to buy or sell), then the computer will try to predict if the price of a stock (or stocks) will go up or will it go down.

The Trading System

Chicago_Mercantile_Exchange_(G._Bush)The system works by a series of bids and offers. Any person can bid to buy a stock; any person can offer to sell a stock. No one is aware of who is bidding, or who is offering. No one is aware of what the volume is (how many stock are available).

Prior to the 1970s – when an electronic system was put in place, a “market maker” would sit in the middle of the exchange and hold a reserve of stock – to keep the market moving and keep the price stable. The market-maker makes money in the transaction difference. Humans still do this, but now machines do this also – either by algorithmic trading or
high-frequency trading.

The market-maker looks at the “bids and offers” via quotes on the CQS (the Consolidated Quotation System) And the world looks at the CTS (the Consolidated Tape System), generally refereed to as the final, trade, or closing price.

Prior to the Incident

Markets had been moving lower for days previous to this. So much so that the Volatile IndeX (VIX) is seen on the screen “VIX up 30%”. We also see gold prices rise ($1200/ounce) and oil prices fall ($78/barrel).

During the video you’ll see a dizzing array of incidents, but things that proceed the Flash Crash including

  • Earnings reports were out and lower.
  • Retailer sales reports were poor. (old money, in many cases)
  • Stocks for all Banks were trading lower. (old money)
  • Japanese Yen & US Dollar are trading higher against all currencies.
  • The Euro is trading lower against the Dollar.
  • The Greek Public Strikes as a “new austerity package” had just passed hours before. (See May 6)220px-2011_Greece_Uprising
  • A comment emerge from the previous day that intra-day lending was becoming unavailable to European banks, and there were signs of “Fragility in the credit system”.
  • A lose in “basis points” as compare against the LIBOR was lending to the volatility.
  • You’ll see, mentioned at the time, but not mentioned in the post-reports that there was “panic buying”.(6:30-end of 5of6) (repeated on 6of6 2:20)
  • Lastly, a report that congress had just passed some new legislation that affected banks and their profitability.

NYSE Circuit Breakers are Off

It’s reported during the “train wreck” that the NYSE Circuit Breakers are Off.

Market Capitulation

It has been widely reported, and appears to be a matter of practice, if a human market makers capitulates (See: Stock market capitulations) – “stub quotes” are put in place. Those quotes are intended to be ridiculous. The practice is to set the capitulation quote at one penny ($0.01 – See: Accenture below)  or one-hundred thousand dollars ($100,000) – neither is realistic for the NYSE.

If this happens – in practice, no humans are in place to slow down the system.

Who Lost Money

Most of the losers were retail investors with stop-lose orders in place. Almost un-reported was that Goldman-Sacks profitted. (See Far Below: High Frequency Trading and the 2010 Flash Crash)

The FLASH CRASH on CNBC

FLASH CRASH! Dow Jones drops 560 points in 4 Minutes! May 6th 2010 – (9:36)
https://www.youtube.com/watch?v=86g4_w4j3jU

The dizzying array of headlines is in the “Breaking News” banner. I won’t repeat a headline, but many are (subtle variations). If I missed a reporter, please let me know.

Gold_Touches_1200

  • below the market price – time mark
  • -$438 – start
  • Gold Touches $1200 (You may miss this, but it will repeat.)
  • S&P Financial Have Biggest One-Day Drop in Six Months
  • More than 95% of S&P 500 Stocks are lower
  • 35% of S&P 500 Stocks are Down 5% or more
  • Five of 24 S&P Industry Groups have had 10% Corrections April 23 Close
  • All 30 DOW stocks lower
  • DOW Down more than 500 Points
  • -$516 – 1:00
  • Stocks Plunge on Greek Worries
  • Rick Santelli, The Euro vs. the dollar just cracked under 126. I’m sure we’re hitting Sell-Stops. We’re hitting knock-outs on the over-the-counter market. (…). -(~1:12)
  • Dow, S&P 500, NASDAQ have Biggest One-Day Drops in over a Year.
  • S&P 500 have Biggest 3-Day Drop since March 2009
  • (NASDAQ has Biggest 3-Day Drop slide March 2009)
  • (Averages Down for Third Day)
  • -$586 – 2:00
  • (Dow has Biggest 3-Day Drop since Late January)
  • Dow Laggards: B of A, Caterpillar, HP, GE (old money)
  • S&P 500 Leaders: Fidelity National, Titanium Metals, MetroPCS, FiServ (new money)
  • S&P 500 Laggards: JDS Uniphase, Office Depot, Time Warner Cable (old money)
  • Many Retailers among Poor Performers as April Sales Fall Short of Estimates
  • Stocks on track for First Two-Week Losing Streak in Two Months.

    S&P500_(1950-12)

    Moving Average from 1950-2012

  • Matt Nesto, ~50, 100, & 200 day moving average broke for the S&P 500.~ -(~2:15)
  • Euro hits 14-month low against U.S. Dollar

922px-Circuit_breaker_10amps

  • -$707 – 3:00
  • Crude hits $78 per barrel
  • VIX up another 30%
  • Matt, ~NYSE Circuit breakers don’t kick in after 2:30pm~ (~3:20-3:30)
  • Scott said, ~This is fear. This is classic capitulation.~ (See: Stock maket capitulations)

 

  • -$860 – 4:00
  • Dow breaks 10,000
  • Michelle said, ~ We’re seeing Fragility in the Credit System (in Europe). ~

Jim_seeDown987

  • -$995 – 5:00
  • Erin, P&G is down 25% (P&G is a bellwether. Hence, Jim’s comment below.)
  • Dow Down over 900 Points
  • Jim says “Look at (P&G). Buy it! (3x)”. (~5:22-5:27) P&G suddenly starts to rise, almost is concert with his words. Fans of the Mad Money with Jim Crammer know, if he says buy three times – it’s usually in the lightning round of his show – and he means buy it now!
  • The market the turns around.
  • -$773 – 6:00
  • (In a matter of seconds, you’ll see the market jump 220 points!)
  • Stock Lose Gains for 2010, 2009
  • -$683 – 7:00
  • Peter (Costic ?) ~ Capitulation with no bid side. (..) There’s Void in stocks. ~
  • Peter (Costic ?) ~ the one thing we can say is we have some serious volume ~.
  • ~8:32 – Jim says, The system broke down.
  • ~9:20 – Jim says, ~ It was there for a blink of an eye, maybe one of these fast pool traders got it. ~

AUDIO from the S&P 500 futures pit at the CME during the “flash crash” of 2010 (Chicago Merchantile Exchange) – (3:38)
https://www.youtube.com/watch?v=E1xqSZy9_4I

May 6th 2010 CNBC Stock Market Flash Crash Special Report Markets In Turmoil – (4:03)
https://www.youtube.com/watch?v=a49nqZxmKJ8
Post analyse on the same day.

  • Erratic trades
  • Accenture (ACN) $40 dropped to $0.01 (one cent)
  • NASDAQ Canceled trades (280+)
  • Liquidity issues

CNBC

FROM: https://www.youtube.com/user/crash6may2010

FLASH CRASH May 6, 2010 (Part 1 of 6) CNBC – (5:24)
https://www.youtube.com/watch?v=IJae0zw0iyU
FLASH CRASH May 6, 2010 (Part 2 of 6) CNBC – (9:13)
https://www.youtube.com/watch?v=_wtFbp6C2h0
FLASH CRASH May 6, 2010 (Part 3 of 6) CNBC – (7:50)
https://www.youtube.com/watch?v=6BkcUYF-QBI
FLASH CRASH May 6, 2010 (Part 4 of 6) CNBC – (5:37)
https://www.youtube.com/watch?v=VlxhHaXh8g4
FLASH CRASH May 6, 2010 (Part 5 of 6) CNBC – (7:30)
https://www.youtube.com/watch?v=Wpx5gBvHNGk
FLASH CRASH May 6, 2010 (Part 6 of 6) CNBC – (8:39)
https://www.youtube.com/watch?v=7UhKOs3dYk4

FOX News

Flash Crash May 6, 2010 Fox Business – (6:29)
https://www.youtube.com/watch?v=Sg4k2NvwG9k

May 6th 2010 CNBC Stock Market Flash Crash Full Video Coverage DVD #1 (~3:17:15)
https://www.youtube.com/watch?v=jhu02uQxKWo

Jim Cramer & JImmy Fallon on the Flash Crash (3:05)JimAndJImmy
https://www.youtube.com/watch?v=9ylwHfKZoJk
This was with Jimmy Fallon on the tonight show.
Jim Crammer, “We have no answers at all.” – (~2:00)
Toward the ends he talks about how “the market is rigged”. (~2:30)

IBTtv – Flash Crash 2010: Trader Relives Nightmare Three Years Later – (5:03) Published on May 6, 2013
https://www.youtube.com/watch?v=htHUJOgX_nw
Mark Otto of Knight Capital is interview.
Mark explains traders realized they knew it was a system error.
He also explains new rules – which require humans to be involved.

Larry_Glosten

Larry Glosten – Columbia School of Business

Larry Glosten: The Flash Crash – (19:30) Talk Given On December 6, 2011

https://www.youtube.com/watch?v=gbk9yXFk4jY
Columbia School of Business – 
Professor Glosten notes the timing coincides with Central Time vs. Eastern Time.
He explanation is, of course, academic.
However, in his explanation  he shows the logical action – which helped break the market, and that is the “stub quotes” entered by the market makers. (~5:00)
They are not high-frequency traders, but high-frequency QUOTERS. (~6:00-6:15)
The market breakdown. (~12:15-13:45)
No limit price on sell order placed at 2:45 (~14:30)
Massive number of quotes and cancellation (~16:00)
New rule added – Rule 13h-1.  (~17:50)
Consolidated Audit Trail was proposed as a new rule – Rule 613. (~18:10)
Nanex.com see something sinister. (~19:10)

hft_trader

Dubbed the Snowden of Wall-Street

High Frequency Trading and the 2010 Flash Crash – Leak Sources News (~6:14) Published on Nov 17, 2013

https://www.youtube.com/watch?v=YS1k5hz0cfE
former HFT trader
suggestion that Goldman Sacks may have profitted from this
MORE (I could not review the Documentary at this link in time for publication): http://leaksource.info/2013/11/17/the-wall-street-code-documentary-2013/
Secrets of a former high speed trader – CNNMoney (5:03) Published on Aug 12, 2013
https://www.youtube.com/watch?v=itxbyXO67XY
Comments on the video include:

  • “HTF were net takers of liquidity during the crash.” (~1:50)
  • “Quote stuffing” is the equivalent of Denial Of Service (~1:55-2:30)
  • “The only explanation is nefarious activity” (~3:20)
  • “Negative externality” (~4:30)

What caused the flash crash of 2:45?  (7:36) Published on Oct 1, 2013
https://www.youtube.com/watch?v=zJja5a7pPSw
Björn Hagströmer, assistant professor at Stockholm University, explains.
Three (3) years after the fact.

The Flash crash of 2010 is not the first and only crash of this sort. Crashes of this sort happen all the time. They are discussed in the longer segments above.
And also here: TEDxNewWallStreet – Sean Gourley – High frequency trading and the new algorithmic ecosystem. (17:42) Published on Apr 12, 2012


I could not review this data.

The Microstructure of the Flash Crash

https://www.youtube.com/watch?v=IngpJ18AhWU