Opponents of real-money prediction markets are strong and powerful. Posted on April 8, 2010 by admin Via Mike Giberson, Hollywood tries to block the Cantor Exchange.Previously. Related PostsCantor Exchange in the New York TimesCFTC approves the Cantor Exchange, but wont approve its movie box-office prediction markets.The Motion Picture Association Of America (MPAA) comes out as fiercely against movie business futures.
Danny Schechter ‘the news dissector’ has an interesting take on the CantorX/HSX story:
HOLLYWOOD: THE NEXT TARGET FOR SUBPRIME SPECULATION
Mother Jones has the story:
• The Wall Street wizards who gave you credit default swaps want to turn the movie industry into their next casino — By Nick Baumann
If you thought the mortgage-backed securities and other complex financial instruments that crashed the economy were risky, you’ll love Wall Street’s latest brainwave: a new financial market in which players can gamble on whether upcoming Hollywood movies will be blockbusters or bombs.
For years, Cantor Fitzgerald, a Wall Street investment firm, has been operating the “Hollywood Stock Exchange,” a fake-money game in which players trade “stocks” to bet on how films will do at the box office. Now Cantor could soon get government permission to make a real-money version of the game—a market in which players can gamble on the success or failure of, say, Pirates of the Caribbean 4. Critics are worried that this new market could be vulnerable to insider trading and create bizarre incentives for moviemakers—and that it will also enlarge the risky family of financial products that helped trigger the economic crisis. [More here >]
Last week, I carried a report that Cantor Fitzgerald, the firm that lost many people in the World Trade Center collapse, has been up to some shady business but I have been told there are many questions still unanswered about this firm. Below, a confidential report on the shenanigans, according to a source I trust:
Cantor Fitzgerald has not yet paid the HSX Holdings Inc. shareholders a penny for the “deal” that transpired in 2001.
A “transaction” occurred in 2001 – that transferred HSX Holdings Inc. voting rights to Cantor – giving the hundreds of investors – who invested $40 mn. dollars into HSX from 1996 – exactly NOTHING.
When queried by lawyers, Cantor claims they lost all the paper work in the 9/11 attacks (they moved the company from Santa Monica Ca. to the top floor of the WTT during the Spring of 2001).
What I know is that a board member of HSX – Woody Knight of SBS (Scandinavian Broadcasting Service) – engaged in a pre-arranged, third party transaction that passed voting control to Howard Lutnick at Cantor – in exchange for $2 million in eSpeed stock (Cantor’s publicly listed entity at the time) that was immediately sold to ‘wash’ the sale.
Cantor is now going to launch ‘box office futures contracts’ based on intellectual property and technology they don’t have the rights to – with the blessing of the CFTC.
According to my sources who are close to this – the CFTC – run by Gary Gensler – a former Goldman guy (of course) – took 25 mn. in ‘lobbying’ fees from Cantor to get these new contracts green lit. But did they do any due diligence? Did they spot the absence of any bona fide transaction between HSX and Cantor?
Does the world really need more weapons-of-mass-financial- destruction from the sickos on Wash. and the CFTC?
Why should we assume that Cantor will operate this market honestly when the circumstances of their “ownership” including the patented “Virtual Specialist” technology used for online CDA (Continuous Double Auction) technology, are dubious at best, if not outright fraud.
Will anyone be able to resist these new products that combine tinsel with wall st.?
Is this the new bubble the CFTC hopes will take people’s mind’s off the current spate of fraud on Wall St.?
Also, can you think of a market that is any easier to manipulate by insiders?
We understand that a former CEO of HSX got calls from people like Jeffrey Katzenberg asking to move prices of their projects up to change the perception in the market place (and media) and to free up more marketing dollars.
Just one example of many, many ways to game this market.