Loading ...This was posted on ZH. This will obviously get zero coverage by the MSM financial outlets, but starts to expose the depth and integration of the manipulation. I realize we’ve talked about it ad nauseum, but it will hopefully continue to be exposed and inform more momentum, passive investors………..
But now, Bloomberg reports a whistleblower has come forward telling U.S. regulators that a scheme to manipulate the VIX costs investors hundreds of millions of dollars a month.
In a letter Monday (see below) that his client found a flaw that allows traders “with sophisticated algorithms to move the VIX up or down by simply posting quotes on S&P options and without needing to physically engage in any trading or deploying any capital.” Billions in purportedly ill-gotten profits have been scooped up by “unethical electronic option market makers,” according to the letter.
The client wasn’t identified by name. He’s held “senior positions at some of the largest investment firms in the world,” according to the letter written by Jason Zuckerman of Zuckerman Law, who has appeared on Washingtonian magazine’s list of top whistle-blower lawyers in the nation’s capital.
Crucially, according to the letter, the whistleblower blames this VIX manipulation as the driver of last week’s volatility complex collapse:
“We contend that the liquidation of the VIX ETPs last week was not due solely to flaws in the design of these products, but instead was driven largely by a rampant manipulation of the VIX index,”