The big money center banks trade against clients ALL THE TIME and they will eat their own in seconds. You cannot ever deal with these people and expect that they are ethical or honest, which is why they OWN the SEC and CFTC along with every other pretend regulatory body.
When I got one of those phone calls from the Japanese government asking me to please buy a French brokerage house, they are really shot-gun weddings. You have no choice but to comply for if you do not, you will not be able to do business. That was Bear Stearns’ problem – they refused to contribute to the bailout of Long-Term Capital Management that would have helped Goldman – not them. They were quickly destroyed and were not saved as a pay-back.
The firm was the 17th largest in Japan and I did not like owning a brokerage house. They were a large participant in under-writings in Japan and every major firm was a client. One had bought several hundred million in paper from Merrill Lynch before they closed in Tokyo back then. That client went to our firm and wanted to sell those bonds. The people in Japan made the mistake of calling a major US broker to get a bid. The broker searched the records to see who was the client and then called them directly. The client called and was furious for that info was confidential and assumed our firm gave that info up. They then had no choice but to refuse to liquidate for that would have been a loss of face.
I had to explain to the Japanese there is no honor among the US big firms. They keep track of every position everyone has and will trade against those positions all the time. They RELY on inside info and every time this is brought up, they deny it and the regulators never investigate. The name of the game is to ALWAYS be profitable. Whatever that takes is fine. There are no ethical worries ever.
