Hello,
I’ve been wondering what kind of fraud-prevention features are in place here on C2. For example, suppose someone creates a system and gets several subscribers. What’s to prevent him from finding a very thinly traded stock, sending autotrade signals to sell the stock at market, and buying it himself dirt cheap? And/or, selling it himself at a sky-high limit and have autotraders buy at market? Or other similar frauds?
I’m sorry if this has been discussed earlier or if there’s a webpage explaining it. I couldn’t find it.
Thanks! 
Such vendor behavior would become apparent through the statistics and reviews for the system.
Yeah, but he would only need to do it once.
Some stocks can go all day with little or no trades, often with no bid/ask either. He could find one of those, send a huge buy order with a limit of $1, and then have his autotraders sell short at market (which would now be $1). If there are no controls, even a few subscribers with small accounts can compound to a lot of money.
I don’t know how it is for system sellers, but for subscribers C2 is basically anonymous. He could even sign up again, sell his system again under a different name, wait a few months and repeat the operation.
Am I mistaken? I’m not trying to criticize or be a pain, I’m just curious and trying to prevent something like this from happening.
Thanks again.
Diego:
The issue you raise is a good one. Let me address it first in a very general way, and then turn to the specifics.
On a general level, it’s important to recognize that C2 is no more prone to fraud or problems than any other old-fashioned trading method. Yes, the C2 platform is new, and interesting, and allows new variants of old, well-known naughty behavior. But the naughty behavior that you’re talking about had been around for a long time… far longer than C2. Indeed, if we are really worried about fraud and front-running, we should probably start by focusing on the off-line world (i.e. the world of ink and paper publishing), where there are hundreds of “publishers” who sent out mailings that tout penny stocks (or even listed NASDAQ stocks). These newsletters are dressed up to look like serious and objective stock analysis, but in reality the publishers of these “newsletters” were paid by the company being “analyzed” in return for promoting its stock. Not only that, but the publishers are usually paid in the form of stock shares! So in effect, the publishers are front-running… they receive cheap stock, and then convince everyone else what a great stock it is, and that it must be bought! Which of course drives up the price of the shares they own – shares that they quickly dump on the unsuspecting suckers.
My point is that C2 does not suddenly create any new forms of fraud that we haven’t all seen before. There are unscrupulous people everywhere, and the financial sector is no different. The best we can do is use our brains, be savvy, and be thoughtful. You can usually spot a huckster if you look carefully.
To address your concerns more specifically: C2 does not allow the trading of penny stocks / pink sheets. So any stocks recommended by a C2 system, and auto-tradable, are generally quite liquid. While I wish I could tell you that C2 is so vast and powerful that we alone could drive the price of NASDAQ issues up or down, I’m afraid that is very unlikely at this point in our development. I think a criminal would be wasting his time and efforts trying to commit front-running through the C2 platform, when there are so many other, much more rewarding opportunities out there for the ethically challenged.
Ah… the fact that C2 doesn’t allow penny stocks and pink sheets is good to know. Most very-low-volume stocks I’ve encountered fall within those categories. That’s basically what I wanted to know: what kind of security restrictions are there.
Thanks again!
however, it does allow trading in illiquid things such as lumber, some little subscribed options, etc…
Great answer!
