You probably already know by now that dark pools offer powerful information. Heck a few…
It pains me to reach out to you this way, but I have to pass on the torch for Dark Pools.
Of course, I’m truly sad because I loved sharing my trade strategy, ideas, and stories of Wall Street’s dirty players with you. However, as a father of two — I hope you understand I need to prioritize my family.
With my newborn son, Lincoln Conway, my life has been pretty hectic.
To be honest with you, it wouldn’t be fair if I continued to do this without dedicating all of my time to Dark Pools. As many of you know, it takes a lot of dedication and hard work to find the “smart money” trades out there… and it’s just something I can’t do right now.
However, I’ve been out looking for the best person to potentially run this service… and I’ve finally found my replacement to run Dark Pools.
I’m passing on my torch to Ben Sturgill.
Why?
Well, I’ve been teaching him dark pool activity, and in my opinion, he’s the better trader in this avenue. He’s able to sit and stare at his screens and uncover where the institutions and elite traders may be placing their bets.
Not only that, but I believe he has the mindset of an elite trader. He remains calm, cool, and collected at all times — maybe because he was a professional basketball player. Additionally, he trades similar to me, he doesn’t think of trading as a form of glorified gambling…
He knows that trading provides a form of income, just as I do.
Right now, Ben tells me he’s got his eye on a few “smart money” trades that he noticed, and I guess you’ll have to catch up with him and see how they work out:
I believe Ben has what it takes to help traders uncover trade ideas in the dark pools, so please, join me in welcoming in Ben — and right off the bat, he’s doled out 3 stocks on his radar now… be on the lookout for his next email.
Tomorrow marks the 10th anniversary of one of the craziest trading days in history. On May 6, 2010, stocks plummeted and traders scrambled to figure out what was going on.
At 2:45:46 PM, there were bids on the New York Stock Exchange (NYSE) that crossed above the National Best Ask Prices in approximately 100 NYSE-listed stocks. That expanded to more than 250 stocks within 2 minutes.
Minutes later that crazy price action led to a massive drop in major-market exchange-traded funds (ETFs)… SPY dropped more than 8% in a matter of minutes, and today I want to show you what may have caused the flash crash of 2010.
My theory is there were large block trades going off, which caused some selling pressure… leading to the massive drop.
Now, the SEC found the sole perpetrator of the massive drop in the market to be Navinder Singh Sarao. He was trading E-mini S&P 500 futures… but he committed a crime. He put in big orders to sell massive blocks of futures contracts at a price just a little bit higher than the best offer.
In theory, his orders wouldn’t get filled, since he wasn’t offering the best price out there. The thing is, Sarao kept updating his orders with the help of an algorithm.
Apparently, Sarao artificially drove down the price of the E-mini futures, which sparked the major selloff across the market. In just a matter of minutes, the market saw nearly $1T worth of value erased.
Now, Sarao allegedly traded more than 62K E-mini S&P contracts, which had a notional value of more than $3B… and made more than $800K in net profits on the infamous flash crash.
Of course, there are theories out there that indicate Sarao wasn’t the only lone wolf who caused this price action in the market.
One theory is that his orders actually may have triggered other trading algorithms out there, causing firms to sell futures. With so much selling pressure, it overwhelmed buyers… leading to the massive plummet.
In reality, the action that went down is a lot more complex than that.
Basically, the high-frequency trading (HFT) tried to profit off the discrepancies in the order book. With the NYSE’s bid prices above the offer prices at some exchanges, the trading algorithms would try to profit off this by sending purchase orders to other exchanges, while placing sell orders on the NYSE.
During a short time frame (just minutes), there were trade executions going off from the NYSE for many stocks, which were actually below the national best bid. If you think about it, why would anyone want to sell stocks below the best bid price?
Who really knows.
But the technology behind this was the culprit, in my opinion. After the algorithms picked up on the price drops, a feedback loop may have been created… leading to panic in the market.
That day may have changed the course of history for many trading firms out there… and hopefully, we don’t see another day like that.
Now, I believe that’s the reason why there are professional traders out there who look for massive block trades because it could potentially impact the market. However, with the advent of dark pools, sometimes these trades go unnoticed. But there may be some important information riddled in the dark pools.
It’s been a wacky market for sure, and to be honest with you, I haven’t seen a whole lot of activity that piques my interest in the dark pools. However, I’ll still be stalking these trading venues to see if there are any large block trades that hit the tape.
In the meantime, I’ve taken the liberty to expose some of the dirty players on Wall Street.
Today, I have a story that may grind your gears.
It involves a former Goldman Sachs executive who was caught playing puppet master to a bribery scheme.
The goal?
To win a sweet government contract to build and operate a foreign power plant.
Asante K. Berko is a dual citizen of both the U.S. and Ghana.
Between July 2014 and December 2016 Berko was an executive at Goldman Sachs. His role at the U.K. branch was to assist with companies developing business in Africa.
The thing is, the way Berko was developing this particular business would become a massive problem… AND violated the Foreign Corrupt Practices Act.
From 2015 to 2016, Berko was involved in a bribery scheme that saw many government officials’ wallets stuffed.
The reason?
A Turkish energy company, AKSA Enerji was trying to win a contract to build and run a power plant in the Republic of Ghana. Thereafter, they wanted to sell the power to the Ghanaian government.
Berko worked out a plan for the energy company to funnel millions to government officials. In other words, I think he was trying to buy the project’s approval.
He would do this by way of a company that would serve as a liaison. This way Ghana government officials would indirectly and get their bribe money in the shadows.
Berko created, set up, and carried out this bribery plan. Enerji put at least $2.5 million towards paying these bribes.
Timing for this scheme was also of the utmost importance.
Berko and Enerji timed the biggest transfers of funds to coincide with milestones in the project’s approval process. This way the funds would be available to shady government officials to help move the project forward.
Here’s the kicker, this wasn’t the only scheme in the works.
Berko also worked with the liaison company to pay small bribes to other government officials.
Two of these government officials were employees of the Ghana Ministry of Power.
Coincidence?
I think not.
They would be the ones whispering confidential info to the liaison, as well as supplying information on the project… information from other government departments that examined the project. Additionally, information from engineers employed by the government evaluated the Turkish company’s tech.
In total, this duo received its own bribe of $210,000.
The Turkish company also wasn’t the only one handing out bribes.
Allegedly Berko contributed $66,000 himself.
Putting money in the greedy palms of different members of the Ghana Parliament and other officials to further the power plant’s approval.
Berko tried to be careful and prevent Goldman Sachs from catching on.
First, emails for the bribery scheme went through his personal email only. The company was diligent. At any time, compliance personnel could review his work email for a number of reasons.
Second, Berko’s employer had a specific document on file. The document claimed Enerji had NOT compensated any liaison or political officials connected to the project. This critical document was never corrected.
But really what would Berko put down? “Bribes galore”?
After striving to keep this bribery scheme under wraps, Goldman Sachs required further due diligence on the project. This was action was taken to see if there were any possible reputational risks that could come with the power plant project.
Also, to look into other concerns as well.
It would be March 2016 when Berko’s scheme hit the fan.
Compliance personnel probably spit hot tea all over their screen when reviewing Berko’s emails… And discovered he WAS involved with the liaison to the company.
After interviewing Berko, the compliance department dove into the situation and was prepared to go over everything with a fine toothcomb.
From May to June 2016 executives from Enerji were questioned about this liaison’s role in the project. These executives handed out half-answers and false information. Not one executive told Goldman Sachs the truth.
When the heat got turned up, Enerji executives shut down, refusing to answer any more questions.
Which isn’t that an answer in itself?
As a result, in August 2016 the company ended its involvement in the Ghana power plant project.
Now get this….
From September 2016 to February 2017 the Enerji paid Berko…
Berko received $2 million for his help (in aiding in the bribery scheme).
During this time… December 7, 2016, to be exact Berko penned and handed over his resignation, which was finalized on March 6, 2017. However, he worked to get the power plant deal closed.
As irony would have it, he was hired on at the Tema Oil Refinery in Ghana. A job that he resigned from April 15, 2020, when he was charged with violating the Foreign Corrupt Practice Act. However, Berko still denies any wrongdoings.
Now, if you think shady dealings only go down in the private sector… think again. I believe there is shady activity going on in the markets, and that’s why I love to follow the dark pools.
There are seemingly well-timed trades that go down in these “private” trading venues, and if I can spot the right block trade, I think I’m in a position to profit.
