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Comment by Ajedi32 | Hacker News Reader

So after the surge in prices from normal market forces, they tried to keep prices up by placing high bids on eggs that they never intended to actually purchase. This briefly worked, then the market re-asserted itself and prices cratered. Now, after the fact, the justice department is investigating the bidding shenanigans. Is that a fair summary of the situation?

I guess the thing I'm confused about is how bidding above market rates for eggs didn't just result in these companies being stuck with a bunch of eggs that they grossly overpaid for? How did the scheme actually work?

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It sounds like the exchange consumes bids, not just closed transactions. So these companies were basically publishing fraudulent bids that never completed.

I can’t tell from the article if they were bidding on each others eggs or bidding on other farmers eggs and then canceling.

Just par for the course. Stock spoofing is rampant, and securities markets are built on "failing to deliver" purchased shares.

https://www.goodreads.com/book/show/57573604-naked-short-and...

https://www.dtcc.com/products-and-services/clearing-settleme...

“Global financial markets may not survive what comes next.”

As if I didn’t have enough to worry about. Lol.

They buy a relatively small number of eggs at a high price, but the price of the transaction is an input into an index that the larger market uses.

So is the real collusion here the fact that an index like that exists? Why are prices set by a centralized index rather than just normal supply and demand? (Genuinely asking; egg markets are far outside my area of expertise.)

All kinds of commodities are sold on centralized exchanges. With those, however, you can't bid and then not settle the transaction, AFAIK. That's the part that's confusing to me, how can bids that never result in a sale affect prices, at least for very long?

As always with financial markets, the answer is read Matt Levine: https://www.bloomberg.com/opinion/newsletters/2026-07-01/egg... aka https://archive.is/rQCv1

In this case it looks like the price-setting market was the spot market for excess eggs but that market was a small percentage of the overall egg market: the majority of eggs are sold in private, years long contracts that are negotiated to adjust to the prices in that small excess egg market. The vulnerability of this kind of market to manipulation is obvious.

There was also some spoofing which apparently also affected the actual prices because the egg market index was not as sophisticated as stock market indexes are.

> This briefly worked, then the market re-asserted itself and prices cratered. Now, after the fact, the justice department is investigating

No, the price drops at the exact moment the DoJ starts looking into it.

There are a lot of market manipulation techniques that follow this type of pattern. Usually the perpetrator does some combination of

1) Putting in the out of market bid and immediately cancelling so the high bid doesn't get filled. Sometimes they might make this bid in small size so it doesn't matter too much if they do get filled (but this only works if the market is relatively thin or illiquid). Depending on the market, you might be able to put order flags or abuse the matching algorithm to make it less likely to be filled even though your order seems to cross the spread. So for example sometimes people will put in an order, cancel and then place it again so they go to the back of the queue at that level for example.

2) Stuffing the order book lower down with (larger) passive sell orders that will get hit as the market followers start bidding up in anticipation of the price move caused by the very high bid.

I'm not as familiar with the regime in the US markets but in UK/EU markets this behaviour is absolutely market abuse and can result in criminal prosecution and disgorgement of profits.

well if you keep reading, the investigation has concluded and they are declining to pursue any charges, alleging that the return of egg prices to pre-collusion levels is the desired outcome. there may be a $3 million fine, which is of course microscopic compared with the profits created from collusion. surely a years-long price fixing conspiracy costing consumers billions deserves more than that, but under this administration we are unlikely to get it.

Sadly, it ain't just the current administration. Try reading about the RealPage rentjacking scandel.

fair enough, this kind of thing hasn't been a strong suit for a while - I had hopes for Lina Khan but she didn't have the time or backup she needed. but right now is an especially laissez-faire moment when it comes to criminal enrichment

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