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Hedge fund manipulation, not error, was behind market plunge

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The major media say the chaos on Wall Street was the result of a “trader error, possibly a typo,” as the Washington Post put it. Some reports claim the culprit was a “fat finger” on a computer somewhere that pressed the wrong key. But Zubi Diamond, author of the Wizards of Wall Street, says these claims are all lies. “What happened in the market on Thursday is a typical example of pure market manipulation” by unregulated hedge fund short sellers including George Soros.

His book, whose subtitle refers to the scam that elected Barack Obama, warns that the same hedge fund short sellers were behind the financial crash of 2008 that paved the way for Obama's election to the presidency.

Diamond says the historic market plunge on Thursday was “due to computerized hedge fund short selling because there is no protection for the invested capital in the equity markets. There is no uptick rule, no circuit breakers and no trading curbs. Our market is primed for manipulation.”

Diamond has been adamant in his view that the financial reform bill being pushed by Obama and liberal Democrats on Capitol Hill will do nothing to solve this problem and regulate the hedge fund short sellers.

“No one will come on TV to tell the truth,” he complained. Instead, he says representatives and apologists for the hedge fund short sellers, who operate as the Managed Funds Association (MFA), “go on TV and provide false explanation of what happened.”

Diamond says these false explanations include claims of trader error and computerized glitches.

“What happened on Thursday happens to a select group of individual stocks on a daily basis as the hedge fund short sellers prey on common investors,” he asserted. “They are now expanding the manipulation to include the whole market. They can now crash the market, panic shareholders out of their stocks, buy to cover their short positions for hefty shorting profits, and then buy back in at the bottom to open long positions and then recover the whole market (indexes) to normal levels.”

These market manipulators, he notes, have the ability to drive prices down and then drive them back up, all within a 15 minute period. “How's that for no-risk investing?” he says. “They make money through stock price volatility and market volatility. They manipulate stock prices through unrestricted short selling.”

Diamond said that one stock, Accenture, with the ticker symbol ACN, dropped from $44 dollars to .01 cent per share within 15 minutes, and recovered back to $41.00 dollars. Apple computer ticker symbol AAPL dropped 60 points in 15 minutes. It went from $258 down to $199 and then recovered to $248. All of this happened within a 15-minute period.

All of this is possible, he says, because there is no uptick rule, no circuit breaker and no trading curbs. All of these regulations were repealed, meaning that the risk and fear of investing have been transferred solely to the common investors “as the hedge fund short sellers operate with impunity looting the invested capital of American families,” he explains.

“What happened on Thursday will happen again,” he adds. “They are getting bolder every day. The hedge fund short sellers, who are members of Managed Funds Association, and their strategic partners at the different stock exchanges, are responsible for the scam that was perpetrated on Thursday.”

“The market plunged and recovered,” he says. “The carnage and destruction of investor's capital was therefore concealed.”

“This is the evil of hedge fund short selling in an unregulated market,” he says.