SCO Group's stock falls (Salt Lake Tribune) [LWN.net]

SCO Group's stock falls (Salt Lake Tribune)

Posted Aug 2, 2006 16:56 UTC (Wed) by sbergman27 (guest, #10767) [Link]

My perception has always been that insiders have been setting the price to some extent for their own reasons.

It's been a while since I watched closely, but I used to note that if the stock was having a bad day, an automatic transaction would kick in at about 4pm to "correct" it, usually to an integer value like 4.00, and the stock would finish the day at or above that value.

Why do this? I dunno. But it seemed clockwork predictable.

The goings on surrounding SCO's owners and their interests have always seemed fairly opaque to me.

SCO Group's stock falls (Salt Lake Tribune)

Posted Aug 3, 2006 17:24 UTC (Thu) by brouhaha (guest, #1698) [Link]

If it could be shown that insiders have been doing that, can't those insiders be prosecuted for securities fraud?

SCO Group's stock falls (Salt Lake Tribune)

Posted Aug 4, 2006 17:11 UTC (Fri) by giraffedata (subscriber, #1954) [Link]

If it could be shown that insiders have been doing that, can't those insiders be prosecuted for securities fraud?

Nope. Buying a stock because it's cheap is perfectly OK. And the person you bought it from couldn't possibly complain that you paid too much for it.

A fraudulent stock purchase is where you cheat the person you're buying stock from by using information he doesn't have access to so as to get him to take less than it's worth.

It's actually very common for stock traders of all types to automatically place orders whenever the asking price falls below a certain amount, which has the effect of making the price consistently bounce back to that level.

SCO Group's stock falls (Salt Lake Tribune)

Posted Aug 4, 2006 18:00 UTC (Fri) by brouhaha (guest, #1698) [Link]

An automatic buy (or sell) that kicks in at a certain price is not the same thing as the claimed monthly scheduled trade to keep the stock at a fixed price. If the original post about that was correct, that seems to fall squarely into stock price manipulation.

SCO Group's stock falls (Salt Lake Tribune)

Posted Aug 4, 2006 18:12 UTC (Fri) by brouhaha (guest, #1698) [Link]

More specifically, the claimed behavior would violate SEC regulation chapter vii section 24.1(a) and 24.1(e). For the transaction to be unlawful under this section, it is NOT necessary that the transaction induce any other party to buy or sell. From http://www.sec.gov.ph/index.htm?src/SecRegCode8799-chapter_vii:

SEC. 24. Manipulation of Security Prices; Devices and Practices.
24.1 It shall be unlawful for any person acting for himself or through a dealer or broker, directly or indirectly:
a) To create a false or misleading appearance of active trading in any listed security traded in an Exchange or any other trading market (hereafter referred to purposes of this Chapter as "Exchange"):
(i) By effecting any transaction in such security which involves no change in the beneficial ownership thereof;
(ii) By entering an order or orders for the purchase or sale of such security with the knowledge that a simultaneous order or orders of substantially the same size, time and price, for the sale or purchase of any such security, has or will be entered by or for the same or different parties; or
(iii) By performing similar act where there is no change in beneficial ownership.

[...]

e) To effect, either alone or others, any series of transactions for the purchase and/or sale of any security traded in an Exchange for the purpose of pegging, fixing or stabilizing the price of such security, unless otherwise allowed by this Code or by rules of the Commission.

I have no idea whether this is actually occuring; I am just pointing out that another person has claimed that this sort of behavior has been happening with regard to SCO stock.

SCO Group's stock falls (Salt Lake Tribune)

Posted Aug 2, 2006 18:15 UTC (Wed) by iabervon (subscriber, #722) [Link]

It's also an indicator of supply. Stock price only takes into account sucessful trades; if people are only willing to pay 2 for the stock, but nobody with the stock is willing to sell for that much, the price doesn't change. If you look at the trading volume of SCOX recently, it's looking like there isn't much consensus on the price. So the price is determined by outliers in the price estimations, and it's not a particularly useful number for any practical purpose.