The story begins in 1963 when Congress identified a number of anticompetitive and manipulative practices in the securities markets. The 1963 Special Study of the Securities Markets identified the following problems:
Failure to honor quotations
Trading ahead of customers
Hand holding
Friendliness among traders ranging from sharing customer trade information to secretly investing in joint accounts
Blackballing
Nontransparent pricing
Wide spreads
The Special Study concluded that "competition in these markets may at times be impaired resulting in an appearance of competition that may not always accord with reality."
To further address these issues, in 1975 Congress mandated change to a national market system with initiatives designed to:
Create greater transparency
Foster greater reliability for OTC quotations
Consolidate and disseminate marketwide quotes
Secure firm quote obligations
More than 30 years after Congress's initial vision, virtually nothing had changed. Once again, in 1994, history repeated itself when the SEC and the Department of Justice initiated formal inquiries into Nasdaq trading and the leading market makers for substantially the same abuses that had rocked the foundations of the stock market in 1963. Old trading abuses were integrated into the new trading technology and were manipulated to allow the continued cheating of the investing public.
A subtle, but extremely effective, conspiracy evolved over the years in which all too many people associated with the Nasdaq
