Stock market volatility is up, is expected to continue into 2012, and has severely damaged investor confidence, according to a CNBC.com article entitled “Buckle Up: Stock Market Volatility Could Get Worse.” Since August, the Dow Jones Industrial Average has moved over 100 points 35 times, there have been no initial public offerings, and a number of companies have withdrawn their IPOs citing unfavorable market conditions. Investors withdrew $60.4 billion from global stock markets in July and August alone.
Observers blame high-frequency electronic trading and leveraged exchange trade funds, as well as a mix of debt crises in Europe and the U.S, excessive political posturing and gridlock in Washington, D.C., upcoming elections in the U.S. and abroad.
High-frequency electronic accounts for the majority of trades on the exchanges and is largely responsible for the tremendous volatility that occurs within a matter of minutes in the markets. This could mean that high volatility is permanent, and not merely a temporary feature of the equity markets that may disappear when and if the politicians come together and agree on a course of action to address problems in the economy and financial markets.
Regulators in the U.S. and abroad have expressed concern that these activities, associated with practices like “layering,” represent a new form of illegal market manipulation. Layering involves misleading the market by issuing and quickly canceling a large volume of trades that were never meant to be carried out. Regulators have fined at least two firms ? Swift Trade and Trillium Brokerage Services ? for layering.
Page Perry is an Atlanta-based law firm with over 150 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 45 occasions. For further information, please contact us.