posted 20 April, 2005 22:01
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MindCeNse,
No, Chad Kultgen never wrote anything more about Carlssin.
It seems that Andrew gathered all the facts about the stock market for those two weeks...but failed to discover that he got arrested.
BTW: I don't know what the SEC would have possibly charged him with (assuming that this was a true event). Andrew didn't use "insider" information. One has to assume that he got the information from a public source, albeit in the future.
"Insider information" is information gathered from a person "inside" the company that is not available to all potential traders. If he got the information from a public source then it was available to all potential traders. That they didn't have the proper tool (his time machine) to discover the information would be a problem for the prosecution to make a case.
A $350 million stock fraud case would be listed on the SEC website. It never appeared there. At the time that this story "broke" I was in a position to make the proper inquiries - and I did. There was no "manhunt" by federal or state law enforcement for this person.
There are other huge holes in the story that involve proper identification, source of income and other qualifications to open a "margin" account with a brokerage. First, you can't do that with just $800. In fact, at that time, I don't know of any brokerage that would allow one to open a regular trading account with $800 - IRA, yes, regular account, no. The minimum is generally $2,500. Day-trader margin accounts require a lot more information than a regular account (or regular margin account)and the brokerage must approve the account. As of February, 2001 the SEC rules changed for day-traders and requires them to have a minimum of $25,000 in their account - not $800.
The story claims that he executed 126 trades in 10 trading days (maybe less as this appears to have happened during the two weeks between Sunday December 22, 2002 and the first week of January, 2003. Bit there were only 8, not 10 trading days during that period. Christmas and New Years Day fell on the following two Wednesdays. That means that, on average, he had to make 16 trades per day. He would be a day-trader.
When you sell a stock that doesn't mean that the money is immediately available. Settlement occurs three days later. So he would have to have a margin account (that he didn't qualify for). He would only have limited cash available for the first week...and his profits would have been relatively small given the small initial account seed capital. He would have had to have made almost all of the money on the last three trading days.
If you're really interested in the case you should do some research. Start by looking at some of the online stock brokerages and look at their margin account applications to see what he would have had to have provided to open one.
And there really weren't any listed stocks (NYSE, NASD, AMEX) that would have given him the movement to turn $800 into $350 million in 8 trading days. That means the penny stock (Pink Sheet) over-the-counter market. That portion of the market is rife with fraud and no brokerage that deals with Pink Sheet stocks would allow him to margin sufficiently to pull this off. They don't necessarily have access to all of the pink sheet stocks.
Again, you should do some research on this portion of the market rather than taking my word on the subject.