Some trading profits are not edge at all. They are taken from other traders by deceit, or they are losses hidden until they are too big to hide. The edge equation still applies: a manipulator's "edge" depends on the licence to trade, so its true expected value includes the fine, the ban and the prison term. A rogue trader's "edge" is a control failure, so the survival factor is zero for the bank. A scam's "edge" is a transfer from its customers, so the system grade is F by definition. Some cases in brief:
What the study covers
- 1Overview: four kinds of deception
- 2The law in one table
- 3Spoofing and layering
- 4Corners and squeezes
- 5Settlement-window and expiry-day manipulation
- 6Rogue traders: concealment inside institutions
- 7Fake systems: when the record is the fraud
- 8Signal services, prop-firm challenges and copy trading
- 9Abuse of customer money
- 10How these cases were caught
- 11Warning signs
- 12How to read fraud and manipulation claims
- 13Key numbers
- 14Landmark firms and cases
- 15Pitfalls
- 16How an expert thinks about it
- 17Glossary
Companies in this study
- Jane Street
- Tower Research Capital
- Jump Trading
- DRW
- Optiver
- Hunt Brothers Silver
- Sumitomo Copper (Yasuo Hamanaka)
- Barings (Nick Leeson)
- Société Générale (Jérôme Kerviel)
- UBS (Kweku Adoboli)
- JPMorgan London Whale
- Kidder Peabody (Joseph Jett)
- Point72 / SAC
- Archegos Capital
- Infinity Q Capital
- Optionsellers.com
- Alameda Research
- BitMEX
- National Stock Exchange of India
- Korea Exchange
- FXCM and the Franc Shock
- eToro
- Nicolas Darvas
- Larry Williams