Friday, May 4, 2012

Who and What is Zero Hedge?

"Zero Hedge is an American financial blog. It reports on Wall Street and the financial sector and is credited with bringing the controversial practice of flash trading to public attention in 2009 via a series of posts alleging that Goldman Sachs' access to flash order information allowed the firm to gain unfair profits. The blog is written by a group of people who write under the pseudonym "Tyler Durden". Though derided by the mainstream press as being fraught with conspiracy theories, the blog grew quickly and has been called a "blog sensation". Zero Hedge was founded in January 2009. Posts are signed "Tyler Durden," a character in the Chuck Palahniuk book and movie Fight Club, reflecting the blog's activist posture. Despite speculation that "Tyler Durden" is a pseudonym of Daniel Ivandjiiski, Ivandjiiski denies being a founder of Zero Hedge. Rather, he says he is one of several writers contributing to the site under the pseudonym. In an interview, "Durden" said there were four contributors to Zero Hedge but another contributor says there are up to 40. Contributors have experience in various areas of finance and operations, differing from journalists who become experts about finance as they write about it, but have no practical work experience in the sector. The blog is anonymous to protect the contributors from retaliation for dissident speech. Durden maintains this protects its integrity, objectivity and independence, as well. Durden cites the First Amendment to the United States Constitution and a 1995 U.S. Supreme Court case, McIntyre v. Ohio Elections Commission, which upheld anonymity as a right of free speech. By September 2009, Zero Hedge had begun drawing more traffic than more established financial websites with 333,000 unique visitors a month, impressing even those who say the blog is full of conspiracy theory and an "apocalyptic world view". Durden says two-thirds of its readers are from Wall Street. Under the name Tyler Durden, Ivandjiiski was interviewed on Bloomberg Radio and Zero Hedge has been quoted in the Columbia Journalism Review. Zero Hedge is credited with bringing flash trading to public attention in 2009 with a series of posts alleging that Goldman Sachs had access to flash order information, allowing the firm to gain unfair profits. It used New York Stock Exchange (NYSE) data to detect Goldman's flash trading advantage. The blog contends that Goldman Sachs alumni are at the center of a powerful cabal and that the solution is "a purifying market crash that leads to the elimination of the big banks altogether and the reinstatement of genuine free-market capitalism" - "Dow Zero." The blog drew the attention of the mainstream financial media and became a source for reporters. Bloomberg News published stories based on Zero Hedge’s blog posts, such as “Goldman Sachs Loses Grip on Its Doomsday Machine,” by columnist Jonathan Weil. The New York Times ran a front-page story on the high-frequency trading, detailing how it translated into billions of dollars of profit for Goldman Sachs and hedge funds. The NYSE has since made a rule change and no longer releases the data used by Zero Hedge. Matt Taibbi, in his book Griftopia, cites Zero Hedge in the last chapter as accurately assessing the level of corruption in the banking industry and credits its inside advantage. He questions why the mainstream financial media did not earlier detect the corruption at Goldman Sachs. Taibbi writes: “ Right around that same time, there were three media stories that helped focus a swirl of seriously negative attention on the bank. My piece was one, New York magazine's Joe Hagan wrote another, and the third was a series of stories by a heretofore little-known blogger who went by the nom de plume of "Tyler Durden" on a blog called Zero Hedge. Durden's blog was written in an impenetrable Wall Street jargon, and the man himself - later outed by nosy reporters as an Eastern European trader who had been sanctioned by FINRA - was intimidating even to Wall Street insiders. "Zero Hedge, man, he makes my head hurt" was a typical comment from my Wall Street sources. Beginning in early 2009 Durden had been on a jihad about Goldman, having sifted through trading data to make what he insisted was an airtight case proving that the bank's high-frequency or "flash" trading desk was engaged in some sort of large-scale manipulation of the New York Stock Exchange. Durden drew his conclusions by scrupulously analyzing trading data the NYSE released each week. So what happened? Naturally, the NYSE on June 24 changed its rules and stopped releasing the data, seemingly to protect Goldman from Zero Hedge's meddling. ” - Matt Taibbi, Griftopia" (Wikipedia)  (Balf's  Note: "... In May 2005, Ivandjiiski became employed by another firm, Miller Buckfire & Co. Nevertheless, before the financing deal for Hawaiian Holdings was announced, he obtained confidential documents that his former firm had prepared concerning the impending deal. On March 14, 2006, while in possession of that material, non-public information, Ivandjiiski bought 1000 shares of Hawaiian Holdings for $4.75 a share. On March 15th, when the new financing was publicly announced, the share price of Hawaiian Holdings increased 6%, to close at $5.30. On March 21, 2006, Ivandjiiski sold his 1,000 shares of Hawaiian Holdings stock for $5.53 per share, for a profit of $780." - FINRA insider trading judgement.  $780?  Sounds to me like he wanted to see if FINRA was functional or not. $780?  Come on.  No wonder he's ticked at Wall Street banksters who got away with billion$.)