Soldier Hedge Funds

    Back in the day, Filch & Finagle was an over-the-counter (OTC) house, meaning F & F didn’t make markets in issues traded on the various stock exchanges, only in unlisted securities of large or mid-sized publicly held corporations.  Banks and insurance companies were all unlisted in those days, and two of the Crime Family’s five traders manipulated stock quotes in those industries.  A third handled arbitrage, mostly in listed names, so there were only two traders gaming the rest of the OTC marketplace and one of them spent much of his time helping the arbitrageur mess with preferred stocks.

    OTC houses charged no commissions on stock trades, getting paid through a spread between the price they’d bid to buy 100 shares of something and what they’d ask to sell 100.  On internal reports, income within those spreads got booked under “fees and commissions”, and pencil pushers classified large amounts garnered outside the bid-and-asked as “trading profits”.

    Trading profits swelled when wise guys convinced big institutions to discount large sell programs because distribution would “flood” the market.  Filch & Finagle could get one of those block trades at a 15% discount, or whatever, then spend a few weeks touting the premium wise guys now claimed these shares deserved to smaller institutions because such quantities weren't always available, and ultimately unload slimmed-down blocks at quotes maybe 15% over where the price had been before the hoedown started.

    The trading desk's target profit happened to be 30% per caper, and you can see why the crooks hit it time after time.  A little off here, a little on there adds up fast when you‘re swindling everybody.  There were plenty of other stings too, often pulled down in concert with complicitous Families.

    We rob your customers and you rob ours was a particular favorite of our mom's.  It always got her leaving the room whenever one of those deals came up.  Sometimes she'd even take a drive.

    Mom had a '55 Chevy for a while, so we'd go too if she let us, and the Irving family's mob connection dropped the subject after a couple of those conversations.  Apartment got real empty, we guess.

     Our mob connection, a man with close matrimonial ties to our mother, who was a Saint, claimed the trading desk made money every month he ran the Filch & Finagle back office, even in the depths of The Great Depression back in the 1930’s.  We asked him to prove it and he showed us the statements, and it was true.  Every single month in the worst of the worst of times, trading profit or loss at F & F always printed black.

    That kind of success has everything to do with the mob definition of trading.

    Bloodsucking thieves dancing around our orders is what it is.  There are two sides to every transaction.  Somebody’s buying and somebody’s selling.  Generally, we give Family soldiers one side and the racketeers go out and find a mark to beat on the other, stuffing the mob’s own pockets with the difference.  Like the gangs were rigging a curling match, you go first so they always get to wield the hammer.  Sometimes offsetting orders come in simultaneously and racketeers take multiple suckers down in one caboodle.  At their most devious, wise guys from all the Families get together and pull the fleecing rug out from under the rest of us through massive short-selling.

    That’s how this ridiculous “trading” racket works.  It's all “proprietary”.  A fancy two-step inside the spread or out.  Nobody at the desk knows where the market’s going.  Nobody even cares.  Thugs simply rip off clients one transaction at a time, every transaction, every time.  When the Dons are ready to move markets, a Kingpin passes the word down.  That’s their business, not the trader’s.

  Those notorious “rogue” traders you read about are silly civilians who don’t understand that price swings happen when Dons make price swings happen.  By getting all the Families together and bullying markets in some direction.

    Rogues are never made men.

    Lately, according to Corporate TV, there’s been an exodus of trading desk soldiers leaving the Families for brand new billion dollar hedge fund start-ups, presumably to comply with new financial regulations.

    It’s our guess that Dons are simply shifting their own billions out of mob brokerage trading desks in order to back mob hedge fund trading desks, and in a way that we’ll never get close to uncovering, making sure their soldiers take the Family’s order book along with them.

    We’ll venture a guess that this way is electronic.  If you’re an SEC hotshot following our blog with regulatory diligence, I’d avoid looking there for sure.

   Chances are good you might find something.*





* Hedge fund trading items matched with brokerage firm fees and commissions. (We’d let the Don thing slide through. They’re way smarter than you.  Too smart to keep a hotshot on the Agency payroll if it looks like he’s close to nabbing them.  Or worse.)