TEGWAR
September 10, 2009
It’s now only 10:05 a.m. and I’m already up in arms.
Here’s my story for today. At 7:31 this morning, somebody at TD placed 23,000 shares of Southern Arc Minerals (SA.V) up for sale at 27 cents. That’s fully 12 cents lower than the next offer at 39 cents. There’s your first red flag. Around about 9:10, this ask had risen to 31 cents, matched by perhaps five bids, including three from (surprise – surprise) Anonymous. What a crock that concept is! Allowing someone to buy and sell without even the brokerage house being named is an outright invitation to game-playing.
Progressively, I watched these multiple bids, along with the ask, rise in unison. No delay. Machine driven. Someone other than TD and Anonymous (if I recall correctly, it was CIBC) was placing bids in an attempt to become first in line for those shares. With each new bid, all entries rose simultaneously. Interested and intrigued, I placed a bid for 10,500 shares at .335. At the time, the next highest bid was .33. Here’s the thing. With receipt of my bid, all other bids rose to .335 as well… all at the very moment my bid was entered. In theory, I was the inside bid. Theory is a wonderful thing, but in the real world, as they say, it doesn’t mean squat! My ‘first in line’ bid was skipped over until Anonymous got his/hers. Only 2,000 shares found themselves in my account, and here I sit with 8,500 shares sitting on the bid at .335.
So what happened? Here’s my take. Don’t take this as a fact, but only as my opinion. Somebody at TD, working in concert with someone called Anonymous, want to hold SA’s share price down for the purpose of accumulating low-cost shares. Seems like a silly idea to me, with almost no liquidity at present, but who am I to say? Somehow, I don’t know how, they’re able to skip over legitimate bids, trading shares amongst themselves, just to bring the share price down. Does this have to involve the market maker(s)? I don’t know. All I can say is that it stinks. I don’t know what the game is, but it’s clearly a game where most people (including me) don’t know the rules. Sort of reminds me of that card game from the great movie Bang the Drum Slowly, starring Michael Moriarty and a young, unknown actor named Robert De Niro (1973). They’d be sitting in a hotel lobby playing cards and apparently having a great time when a sucker wanders by and asks to join in. Doesn’t know the rules, of course, and they fleece him for whatever he’s got. The game’s called TEGWAR. Stands for The Exciting Game Without Any Rules. Gets ‘em every time.
Until and unless the TSX acknowledges this kind of thing as wrong and bad for the market (including itself), the whole business of trading stocks will leave a bad taste in the mouth of the little guy. Transparency? Free market? Not on your life!
Maybe it’s time to revisit the piece I wrote a year ago in June: http://www.grahamanalytics.com/Commentary/fire_in_the_hole.html
Kevin Graham