Somewhat tangential to the above story, but important nonetheless, is an understanding of how US corporations have, in effect, one shareholder -- DTCC! GSax is one of the main owners of DTCC.

Here is an excellent analysis of how it works ...

"The Rise and Effects of the Indirect Holding System: How Corporate America Ceded its Shareholders to Intermediaries"

http://publikationen.ub.uni-frankfurt.de/volltexte/2007/4885/pdf/ILF_WP_068.pdf

It compares the functioning and consequences of "immobilization" with "dematerialization".

Is it illegal to read the fixed area of the message, yes or no, or does the use constitute material non-public information? I suggest that access to that is probably more widely available than might be known and as such maybe something that GS can claim is a privileged situation rather than an insider's garnering of non-public information. So if one is a Secondary Market Professional Participant does the access to information not generally available to the public constitute insider access? I suggest that others have this information and exploit it and that the so called statistical approaches to reading trade data are cover stories for the robust returns so black boxes seem to generate. In fact if a statistical black were to exist and was geared to influence the data by inserting transactions of significance, then manipulation might be involved. I doubt that GS would be so stupid as to place their necks on the chopping block and therefore have probably skirted any legal ramifications.

It has been long rumored that this sort of systematic cheating goes on in the trades between firms, wherever you have the computers of many firms using any type of business protocols more than one step. The more complicated the trade, such as swaps and other derivatives, the more steps are necessary for the traders and sometimes principal parties to negotiate the trade, and for the computers on each end of the trade to assemble their final picture of the trade for commitment, and this allows more time for the firms to understand the trade, the market, and whether to quickly execute a trade before their customer. I could tell you more, and I begged them to tell me more, but they didn't; they would have to kill me.

Economic analysts are predicting Goldman Sachs has earned a staggering $2 billion since March. The bank’s stock value has soared 68 percent this year, and analysts predict the bank will pay a total of $18 billion in compensation and benefits this year—that’s an average of more than $600,000 per employee. Goldman Sachs has been a major beneficiary of the government’s bank bailout program. Last year the Bush administration quietly funneled $13 billion to Goldman Sachs as part of the bailout of the failed insurance giant AIG. The government also gave Goldman Sachs $28 billion in low-interest loans.

Now that the cat is out of the bag the SEC and the titans of the prelook trading regime ie the information bandits are shutting the door closing their non-competitive advantage, but rest assured that within the fine details of the new regulations access to non-public information will be retained for those with the funds to manipulate the legislative and interpretive intentions. The simple fact that Specialist in a defined exchange setting had the only access to potential GTC transactions and those with open orders was necessary for liquidity, has been replicated by the major dealer desk who have by government fiat replicated that franchise without disclosing it to the rest of the participants. This direct intervention by the government has eroded the confidence to such an extent that only those that would invest in coupons on a breakfast cereal are left and the carnage of this devastated landscape is now the domain of the mega-scam artist. The US Capital markets are now the lottery of a third world nation clinging to the remnants of a once great structure. Eventually perhaps in another couple of centuries dealers of good faith with valid reasons to raise capital can address this historical collapse and peer down the long dark tunnel of time. I suggest that alternative currencies be explored a non-repudiated means of perfecting commerce is required the escalation of the need for such a currency is being advanced daily via coordinated quantitative easing and all it would take is one mis-step for that house of cards to crumble. Coordinated quantitative easing is the large scam propped up by smaller scams the capital markets are one of them followed closely by commodities and the regimes of transfer pricing located in so called tax free havens. The greatest arbitrage of human resources is coming to a close whereby the commodity producing nations starved for capital will pierce the veil of the so called developed nations non-competitive pricing for consumer goods. Beef produced in Brazil under acceptable standards should not be sold at usurious premiums in developed nations solely to satisfy the advanced and useless taxing regimes. The tariff will cede from the landscape and the ineffective methods of regulating commerce will vanish and along with these events the Capital Markets, Commodity Markets, and Taxing Authorities will finally be laid to rest.
http://www.ft.com/cms/s/0/db147d42-8158-11de-92e7-00144feabdc0.html
SEC plans clampdown on flash trades
By Joanna Chung and Michael Mackenzie in New York
Published: August 5 2009 03:00 | Last updated: August 5 2009 03:00
The US Securities and Exchange Commission is preparing to clamp down on lightning-fast "flash" trades made on electronic trading systems amid growing concerns that the practice puts some investors at a disadvantage.

Mary Schapiro, SEC chairman, said yesterday that she had instructed her staff to find "an approach that can be quickly implemented to eliminate the inequity that results from flash orders".

The SEC has been looking into flash orders - in which some exchanges allow traders a look at share order flows a fraction of a second before the broader market - as part of a review of so-called "dark pools", anonymous electronic trading venues that do not display public quotes for stocks. Ms Schapiro's statement underscores the agency's intention to respond quickly to market concerns.

Flash orders have stoked the ire of lawmakers, including Charles Schumer, the New York senator who has urged the SEC to ban the practice. Mr Schumer said Ms Schapiro had personally assured him that the agency planned to put a ban in place.

"It is also important to make sure flash orders aren't just the tip of an iceberg lurking in the dark reaches of the market," he said. "There is a lot of mystery about what goes on in dark pools and in the realm of high-frequency trading generally."

Any proposals would have to approved by the full commission and be open to public comment.

Flash orders are not endorsed by NYSE Euronext, whose share price rose nearly 4 per cent after the SEC statement was issued. But rival Nasdaq OMX - whose share price briefly dropped about 3 per cent before recovering yesterday - and other trading venues such as BATS and Direct Edge use them to compete for market share.

The use of flash orders is not confined to high-frequency traders. Retail brokers, institutional investors, proprietary trading firms and automated market makers also use the orders.