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View Diary: Rigging The Intrade Market For Romney Last Year (90 comments)

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  •  An interesting point about Intrade's... (18+ / 0-)

    ... legality in the US from Wiki:

    On November 26, 2012, the U.S. Commodity Futures Trading Commission filed a civil suit in federal district court in Washington, D.C. seeking an injunction against Intrade allowing U.S. citizens to trade on their site.[16] The US CFTC claimed that Intrade's operation interfered with the CFTC's role "to police market activity and protect market integrity". Shortly thereafter (though not explicitly in direct response), Intrade announced it would no longer allow U.S. customers to participate in the real-money version of the site.[17] Intrade announced that all existing U.S.-based accounts would be suspended on December 23.[18]
    So three weeks after this guy lost his bets, the CFTC made US trading on InTrade illegal.

    Looking through the bent backed tulips, To see how the other half lives, Looking through a glass onion - John Lennon and Paul McCartney

    by Hey338Too on Tue Sep 24, 2013 at 12:05:51 PM PDT

    •  Reads more like the CFTC filed suit (5+ / 0-)

      And Intrade rolled, rather than fight the suit.  Just another fishy smell in what initially looked like a minor blog post.

      But maybe there's something more going on here?

      •  It sounds like the CFTC suit was related to... (7+ / 0-)

        ... commodity futures:

        Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today filed a civil complaint in federal district court in Washington, DC, charging Intrade The Prediction Market Limited (Intrade) and Trade Exchange Network Limited (TEN), Irish companies based in Dublin, Ireland, with offering commodity option contracts to U.S. customers for trading, as well as soliciting, accepting, and confirming the execution of orders from U.S. customers, all in violation of the CFTC’s ban on off-exchange options trading. The CFTC’s complaint also charges Intrade and TEN with making false statements concerning their options trading website in documents filed with the CFTC, and charges TEN with violating a 2005 CFTC cease and desist order (see CFTC Press Release 5124-05, October 4, 2005).
        But the InTrade shutdown notice, three months after the CFTC action, referenced "financial irregularities":
        With sincere regret we must inform you that due to circumstances recently discovered we must immediately cease trading activity on www.intrade.com.

        These circumstances require immediate further investigation, and may include financial irregularities which in accordance with Irish law oblige the directors to take the following actions:

            Cease exchange trading on the website immediately.
            Settle all open positions and calculate the settled account value of all Member accounts immediately.
            Cease all banking transactions for all existing Company accounts immediately.

        During the upcoming weeks, we will investigate these circumstances further and determine the necessary course of action.

        The New Yorker takes the guessing game a little further and adds a little heat to the light of TomP's diary:
        Obviously, the big story would be if Intrade, or the authorities, had uncovered efforts to corner one or more of the prediction markets on the electronic exchange, which allowed people to bet on everything from the weather to the Oscars to politics. During the Presidential contest, there were rumors about efforts to manipulate Intrade’s election market, which many journalists, myself included, monitored closely to see how investors and bettors were viewing the chances of Barack Obama and Mitt Romney. For example, after the first debate, in which President Obama did badly, the estimated probability of him being reëlected fell sharply on Intrade—more sharply than could easily be justified on the basis of one off night—prompting some dark mutterings that Romney supporters might have been trying to ramp the market.

        This was just speculation, of course. Quite possibly, the irregularities that Intrade mentioned in the statement it posted on its home page on Sunday evening have little or nothing to do with the actual prediction markets. Intrade’s reference to having to cease banking activities could theoretically suggest that it had been operating without sufficient capital, or while it was otherwise in financial trouble. Last November, the Commodity Trade Futures Commission sued Intrade to stop Americans from using the site, saying that it was illegally selling futures contracts, which can only be traded in the United States on a registered exchange or by special exemption. Since then, the number of people using the site has plummeted. Last year, more than a million trades took place on the site, according to Intrade’s own figures. So far this year, there had been just 52,166 trades. This decline must have affected Intrade’s finances adversely.

        Looking through the bent backed tulips, To see how the other half lives, Looking through a glass onion - John Lennon and Paul McCartney

        by Hey338Too on Tue Sep 24, 2013 at 03:58:12 PM PDT

        [ Parent ]

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