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In this shared piece, author Brett Cenkus argues that nation-states will cease to exist not because of a who, but a what - and it's already here.

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August 31, 2001

The Great Wall Street Swindle: A Legendary Trader Who's Seen It All, And Done It All, Now Tells It

By Brian O'Connell

Salim praises the Big Board as the "most honest and fair market" (page 119), but questions the fairness of Nasdaq and other markets, which he charges are invisible. "At trading desks within brokerage firms, the transactions are done primarily on the phone or between traders or electronically. There may be as many as 40 market makers in a particular stock, and each one posts its own bid and ask on a computer network...All these trading desks at all these firms serve one purpose: to make money for the firm. And you pay the price," Salim writes (page 119).

Although one admires Salim's avenging angel campaign against the thieves of the business, one wonders, at the end of the book, why his own investments sometimes blew up. And, in reading about his outrage against Wall Street, one questions sometimes if he didn't, in fact, tacitly become a part of the system that he abhors. Take the issue of penny stocks.

In another compelling part of the book, Salim tells the story of a penny stock manipulator of the 1980s who seemed to be beyond the reach of regulators. That's because this sleazebag had no licenses but accomplished his chicanery through a network of venal brokers who executed all his transactions. The brokers would help distribute overpriced shares of his penny stocks. This boiler room operator would entertain his brokers at the best restaurants, "buy them beautiful whores, and promise them a cut of the shares they sold." (page 108). After bidding up these sleazy stocks, Frank, the boiler room operator, would jump out with millions of dollars of gains. Salim condemns him in his book, yet Salim concedes that he used his knowledge of Frank's operations to make money.

"Frank," Salim said he told this boiler room operator, "why don't you do me a favor sometime? Tell me before you start this nonsense and let me make a little money!" (page 108). Later on, Salim admits that he did tip him about a couple of deals and that Salim made a couple of hundred thousand dollars because of this boiler room operator, who later told him, "you owe me, you son of a bitch." (page 109).

Somehow, all of Salim's complaints about penny stock scams ring hollow after this episode, especially when he quotes Frank as calling him a, "goody two-shoes." Salim strikes me as a very bright man. But I would not mistake him for a man of rectitude when the subject is markets. Yes, he knows where the bodies were buried, but didn't he have some moral responsibility? And didn't he profit from some of these outrageous operations? These are questions that Salim should answer.