The hounds are tracking Goldman Sachs.

Abridged version:


1. GS developed high end algorithms that could track and predict market movements based on historical data

2. GS has the capital to invest in ultra high-end equipment to run their data sets

3. GS also has their system on the actual network at NYSE

4. With the best equipment and algorithms right on the nexus of the NYSE, GS would be able to "front run" the entire market

Ta-da!

GS, through access to the system as a result of their special gov't perks, was/is able to read the data on trades before it's committed, and place their own buys or sells accordingly in that brief moment, thus allowing them to essentially steal buttloads of money every day from the rest of the punters.

Two things come out of this:

1. If true, this should be highly illegal, and would, in any sane country result in something like what happened to Arthur Andersen after it was found out they were deliberately helping clients shred evidence.

2. NEVER place 'market' orders. Always set your buy/sell prices. Market orders are just begging for somebody in the chain to steal money from you.

Yep. It's just high-tech frontrunning.

The simplified version is that GS has access to the network where the pre-transaction communication takes place and is using that information to frontrun the market. Frontrunning used to be done mostly by brokers and specialists who had access to the order information prior to the execution of the trades - they would then either buy or sell for their own account before the real trades occurred, accruing a small profit on each transaction. Looks like GS is doing the same thing, only with high speed computers. This is illegal on every exchange that I know of. So when are the indictments coming?

Goldman Sachs has had offices in Switzerland since 1974. The firm had provided investment services to wealthy individuals and families for over 45 years, so the idea of founding a Swiss private bank was a natural evolution for the firm. In 1992, the firm was granted a prestigious Swiss private banking licence.

The firm identified a need among its global private clients to combine the Goldman Sachs service level with a Swiss-based discretionary asset management program. Goldman, Sachs & Co. Bank combines the advantages of access to all global resources of Goldman Sachs with the added benefits of Swiss banking secrecy and the safety provided by a legally independent fully licensed Swiss bank.

/.. http://www.schweizer-banken.info/en/bank/zurich/goldman-sachs.htm