August 13, 2008
Silver bullets, silver homers
Some things that have been disturbing my desktop for too long. First, a silver bullet spotted:
Verisign Aims to Deflate 'Pump and Dump' Scams August 11, 2008 By David Needle.A fraud-detection service warns online brokerages when they're about to make a trade that looks fishy. Verisign is taking a new approach to the battle against so-called "pump and dump" schemes that artificially hype stocks.
A new module for the company's VIP Fraud Detection Service, set for release this Friday, features a "self-learning" behavioral engine designed to help brokerages spot and avoid pump and dump activity. The system works by weighing a number of factors, including stock risk, user behaviors, how trading compares to known fraudulent trades and the volume of trading for a particular stock.
The notion that a broker has to be told what is a dodgy stock and what is a scam is a bit like telling a mafiosa what is a crime, or the pope what is a heathen.
Meanwhile, over in Euro-coin-land:
A one euro coin has turned up in Spain bearing the face of cartoon couch potato Homer Simpson instead of that of the country's king, a sweetshop owner told Reuters on Friday.Jose Martinez was counting the cash in his till in the city of Aviles, northern Spain, when he came across the coin where Homer's bald head, big eyes and big nose had replaced the serious features of King Juan Carlos.
"The coin must have been done by a professional, the work is impressive," he told Reuters.
In the old days, the punishment for forging money was to lose ones head, so we expect Homer to be arrested any day now.
I'm guessing that some artist has done this, and only after they did it did they find out how many years of jail they are facing.
Question is, does the artist's right override the right of the Seignor to collect his seigniorage? Given the record of central banks lately, the latter's right is looking increasingly dodgy.
Re: 'Pump and Dump' Scams
Looks like they've set up some spam-trap e-mail addresses, and are monitoring them for the occurrence of ticker symbols of thinly traded/OTC stocks. Correlating this with unusual trades ought to yield some fairly damning evidence of a pump 'n' dump going on.
It might be a good idea to warn people in a non-intrusive that there is a suspected pump 'n' dump in progress, but they'll have to be careful how they roll it out for an online brokerage. Traders who are used to having their orders go through with a maximum of reliability and a minimum of fuss might be very upset if they are suddenly locked out of their accounts for suspected fraud (à la PayPal). What if someone is temporarily in a risky position that he/she needs to cover right away?
In my opinion, if you are running an online brokerage, you should just have a reliable computer system that sells when the customer says sell, and buys when the customer says buy (as long there's money to cover it). If people want advice, like "Well, that might be kind of a risky trade because we've noticed some suspicious activity lately, and blah, blah, blah ... maybe this other stock would be better..." they need to pick up the phone and call their broker.
Posted by: anon at August 14, 2008 06:39 AMIt looks to me as if somebody started with a real euro coin and modified the engraving. I've only seen a low-quality photo from one of the freebie daily papers, though. I've scanned it and I'm sending it to you under separate cover.
Posted by: Ray at August 14, 2008 09:52 AM