Reveals The Dirty Little Secrets That Wall Street Doesn’t Want You To Know

Key Ideas

  1. The deceptive Wall Street scam practices you must watch out for.
  2. How transactions costs could be far higher than you realized.
  3. How to solve Wall Street’s methodically planned, legal deception.

Let’s begin with a story…

In the early 1990s, I managed a portfolio for a successful hedge-fund.

We operated multiple investment systems, each with a unique risk profile. One of those systems was a long-short equity portfolio.

We hired a reputable, big-name, institutional brokerage firm to transact the trades for our account. We agreed on a commission rate to fairly compensate their services.

Unfortunately, fair compensation wasn’t enough. They wanted more.

“Fraud is the ready minister of injustice.”– Edmund Burke

How Wall Street Legally Deceived Me

The first symptom that something was wrong was when I noticed inconsistent trade execution. I tracked the market for each stock when I called in my orders (yes, we used the phone back then), and noticed most trades were well-executed.

However, an occasional trade would come back significantly out of line with market pricing at the time of the transaction. The difference was always in the expensive direction.

I questioned the broker on these trades but he couldn’t find a problem … yet the problem persisted.

To make a long story short, I did some research and determined that each of the poor executions were NASDAQ listed stocks, which this particular brokerage firm made a market in.

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