Goldman Sach’s dark pools are under investigation according to an SEC report.
The SEC published a report highlighting what essentially seems to be a deep audit.
This is not the first time Goldman Sachs has been fined or investigated for abusing its power.
Dark pools played a massive part in the recession of 2008, but dark pools were never banned.
Will something finally be done about it this time around?
In this article I’m going to break down everything they’re looking into, starting with Goldman Sachs’ dark pools.
Let’s break it down together.
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Feds crack down on Goldman Sachs dark pools
The fed is looking into various matters relating to Goldman Sachs’ businesses and operations.
One of which stands out to retail investors as being its dark pools.
The fed is investigating the supervision and controls relating to Goldman’s high frequency trading (HFTs) and its alternative trading systems (ATSs), also known as dark pools.
Dark Pools (also benignly called Alternative Trading Systems or ATS) are effectively unregulated stock exchanges being run by the same megabanks on Wall Street that blew up the U.S. financial system in 2008 and received the largest taxpayer bailout in U.S. history. – Wall Street On Parade.
The name of Goldman Sachs’ Dark Pool that trades in the U.S. is called Sigma X2.
It used to be called simply Sigma X.
According to a publicly-available document, Sigma X is now used by Goldman Sachs to designate the Dark Pools it operates in foreign jurisdictions, which include Europe, Japan, Hong Kong and Australia.
Dark pools are the gateway that allow financial institutions to manipulate the stock market without any regulation.
Now the fed is cracking down on Goldman Sachs and it comes as no surprise since the bank has been criminally charged on many occasions before.
In October of 2020, Goldman Sachs admitted to the charges of a bribery scandal where they were fined $2.9 billion.
Other operations being looked into
The fed is looking into the institution’s advisory services and conflicts of interest.
They are also tackling the following:
- Research practices, including research independence and interactions between research analysts and other firm personnel, including investment banking personnel, as well as third parties.
- Transactions involving government-related financings and other matters.
- The offering, auction, sales, trading and clearance of corporate and government securities, currencies, commodities and other financial products and related sales and other communications and activities.
- As well as the firm’s supervision and controls relating to such activities, including compliance with applicable short sale rules, algorithmic, high-frequency and quantitative trading, the firm’s U.S. alternative trading system (dark pool), futures trading, options trading.
- And finally, insider trading.
The SEC said in past years they were tackling dark pools but failed to competently execute the plan.
The issue was brought to the light by the ‘meme stock’ crowd who also exposed naked short selling and received attention by mainstream media.
Dark pools have been able to suppress stock prices across the market from reaching full demand potential.
Gary Gensler said 90%-95% of retails orders do not get processed through the lit exchange (NYSE) but rather through these dark pools.
Goldman Sachs and others have essentially stolen from retail investors as only 5%-10% of retails money actually creates demand for a stock.
For every dollar retail puts in the market, only this small percentage is reflected on a security.
That’s what happens when financial institutions like Goldman Sachs redirects orders through its dark pools.
This is a developing story.
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