Trader Drove Up Price of McCain ‘Stock’ in Online Market
By Josh Rogin, CQ Staff
An internal investigation by the popular online market Intrade has revealed that
one investor has been attempting to artificially boost the prediction that Sen. John McCain will become president.
Over the past several weeks, a single investor has pushed hundreds of thousands of dollars into the McCain-Obama market, the company said, resulting in great financial losses through a strategy that belies any financial motive.In a statement Thursday, released in response to queries by Congressional Quarterly, Intrade chief executive John Delaney said that after an extensive investigation into the suspicious trading patterns, Intrade found no wrongdoing of violation of its exchange rules.
“The trading that caused the unusual price movements and discrepancies was principally due to a single ‘institutional’ member on Intrade. We have been in contact with the firm on a number of occasions. I have spoken to those involved personally,” said Delaney.
Intrade is a popular predictive-market Web site that pundits and politicians have used to track the fortunes of the two presidential candidates. Through the site, begun in 1999 and incorporated in Ireland, traders buy and sell “contracts” that function as stocks, allowing investors to gamble on the outcomes of political, cultural, or even geological events such as the weather.
The company claims and experts confirm that the Intrade market is generally more accurate in predicting outcomes of major events than other leading indicators, such as polls.
But the relatively small scale of the market and its lack of outside regulation leave the system vulnerable to manipulation from well-monied investors who either have inside information or seek to manipulate the market for political purposes.
more...
http://www.cqpolitics.com/wmspage.cfm?parm1=5&docID=news-000002976265
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
