“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,”

Of course, Goldman isn’t the only group out there using high-frequency program trading. If Goldman’s code could manipulate the market, couldn’t other codes do the same? Of course they could. And here’s what the SEC had to say about it…

The Securities and Exchange Commission believes institutional money managers are “sophisticated” enough to trade against the machines without further regulation.

“We don’t want to curtail liquidity,” said Gene Gohlke, associate director for the SEC. Gohlke said it’s up to the managers themselves to make sure other traders aren’t manipulating their models.

The SEC, tasked with preventing market manipulation from destroying the retail investor, is turning a blind eye to what’s happening in the market in the name of “liquidity”.

What bastards.

During the entire market fall the SEC has given the appearance of actually caring about you and me. They banned short selling and are on the verge of reinstating the uptick rule.
But that’s not where the money is. The money is in program trading. Program trading alone could move the markets far more easily than a few short sales.

Of course, the members of the SEC don’t have you and I buying them box seats to the Yankees games or bottles of Dom just for being “nice”. The loyalty of the SEC has already been bought by those with money – institutions like Government Sachs.