Maybe They're Not Prosecuting Wall Street Because the FBI is Playing World of Warcraft

Two University of Michigan students who were suspected of gold farming on Activision Blizzard's  (ATVI) World of Warcraft (because virtual work is the only kind people can find these days, unless it's free) got a visit from the FBI at the end of March. "Investigators seized laptop computers, hard drives, video game systems, credit cards, a cell phone, paperwork and other computer equipment, documents say."

Why is the FBI interested in virtual gold farmers? Because criminals can apparently use online games to launder money. And yet, we already know that criminals use real banks to do that. Wachovia, now owned by Wells Fargo (WFC) was used for just that purpose by Mexican drug lords, who, incidentally, were equipped by the ATF.

The feds might fear that any new investigations into banks will cause new financial turmoil. Or maybe it was just a coincidence that the financial crisis of 2008 happened to start when the cartels, fearing an investigation, paused with their money laundering. (There are other opinions on this, of course.)


So Why Hasn't Anyone Been Prosecuted for Crimes Committed During the Financial Crisis?

The New York Times quotes William Black, a law professor and director of litigation during the late 1980s savings and loan crisis:

“This is not some evil conspiracy of two guys sitting in a room saying we should let people create crony capitalism and steal with impunity. But their policies have created an exceptional criminogenic environment. There were no criminal referrals from the regulators. No fraud working groups. No national task force. There has been no effective punishment of the elites here.”

In other words, despite that first line, two guys (Tim Geithner at the time President of the NY Fed and Andrew Cuomo at the time NY Attorney General) sitting in a room decided that Wall Street Elites could steal with impunity. The only thing wrong with this very general account is that more than two guys were involved.

It's clear that there was and is rampant fraud. Why hasn't anyone been prosecuted? Because the people deciding on whether there will be prosecutions are themselves part of the fraud. It's absurd, after all, to prosecute yourself.


Ever Wonder Why Your Orders Aren't Executed as Quickly as They Used to Be?

I often have this problem. I want to buy or sell a few hundred shares or options. My ask is lower than the bid when I'm selling and my bid is higher than the ask when I'm buying. And I don't have "all or none" checked. Yet, my order goes unfilled.

Here may be the answer:

"In the regular trading arena, all orders must be executed according to price-time prioritization. That is, the best price must win, and if two orders have the same price, the one that was entered first is executed.

"Not so for the dark pool. In this new marketplace, institutional sellers can choose who they want to sell to. For instance, if an institution asks TD to sell 100,000 shares of a company, TD can enter the trade in the dark pool as an institution. But it can also set up an algorithm that tells its sell order to look for TD retail bids first. TD can even go so far as to tell its algorithm to look for bids in a certain orders, so TD bids could be first then RBC's, then CIBC's. Preference can also be given to larger sized orders over smaller partial fills that were posted first." This is in Canada, but rest assured we have it in the rest of the world's markets as well.

In this brave new world where computers trade with each other the whole day for at least the past couple of years, where Warren Buffett's lackeys front running him is apparently standard operating procedure, and where the regular people are now willing to work for free should we really expect anything different?

Another Day, Another Theft

What doesn't Goldman Sachs do?