Breaking: FBI Arrest Opens Goldman-Sachs' Pandora's Box

by bobswern
Mon Jul 06, 2009 at 02:51:26 AM PDT

Up until about two weeks ago, Matt Taibbi's favorite Goldman Sachs' market observers, the folks over at the Zero Hedge blog, had been continually commenting over the past six-plus months about how Goldman had all but cornered the market on program trading within the NY Stock Exchange. (Program trading is the automated stock trading via computers by firms specially authorized by the NYSE to facilitate same.) Clearly, according to Zero Hedge publisher Tyler Durden, something was up.

A couple of months ago, we also learned through Zero Hedge that Goldman had profited greatly from a sweetheart deal with the federal government concerning a new program instituted by the Feds known as "The Supplemental Liquidity Provider" Program ("SLP"), launched this past Thanksgiving, which was supposed to provide "market liquidity" (i.e.: an ongoing, active market) for selected groups of 500 different NYSE stocks per SLP participant. As Durden pointed out to all who were interested, it certainly appeared to him that Goldman was the only active participant in the program.