FBI Said to Probe High-Speed Traders Over Abuse of Information

[Bosonic]

Source: Bloomberg

Federal agents are investigating whether high-frequency trading firms violate U.S. laws by acting on nonpublic information to gain an edge over competitors, according to a person with knowledge with the probe.

The Federal Bureau of Investigation’s inquiry stems from a multiyear crackdown on insider trading, which has led to at least 79 convictions of hedge-fund traders and others. Agents are examining whether traders abuse information to act ahead of orders by institutional investors, according to the person, who asked not to be named because the probe is confidential. Even trades based on computer algorithms could amount to wire fraud, securities fraud or insider trading.

The FBI joins a roster of authorities examining high-frequency trading, in which firms typically use super-fast computers to post and cancel orders at rates measured in thousandths or even millionths of a second to capture price discrepancies. New York Attorney General Eric Schneiderman opened a broad investigation into whether U.S. stock exchanges and alternative venues give such traders improper advantages.


Read more: http://www.bloomberg.com/news/2014-03-31/fbi-said-to-probe-high-speed-traders-over-abuse-of-information.html

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REPORT: The FBI Is Investigating High-Frequency Traders

(Business Insider) The FBI is investigating whether high-speed trading firms trade on non-public information, the Wall Street Journal reports.

The agency is working with the SEC and CFTC.

CNBC's Eamon Javers said an FBI spokesman is urging anyone with information about high-frequency trading abuses to call 202-384-1000.

The report comes after Michael Lewis appeared on "60 Minutes" to argue that high-frequency traders have "rigged" the stock market.

http://www.businessinsider.com/report-the-fbi-is-investigating-high-frequency-traders-2014-3

[Bosonic]

1. US stock market is rigged by high-speed traders

US stock market is rigged by high-speed traders

The US stock market is rigged in favour of high-speed electronic trading firms, which use their advantages to extract billions from investors, according to the acclaimed author Michael Lewis.

In his new book Flash Boys: A Wall Street Revolt, Lewis says that firms are using their speed advantage to profit at the expense of other market participants to the tune of tens of billions of dollars.

"They are able to identify your desire to buy shares in Microsoft and buy them in front of you and sell them back to you at a higher price," Lewis, whose book is available on Monday, said on the television program 60 Minutes on Sunday.

"This speed advantage that the faster traders have is milliseconds, some of it is fractions of milliseconds," said Lewis, whose books include The Big Short and Moneyball.

http://www.theguardian.com/business/2014/mar/31/us-stock-market-rigged-michael-lewis

[questionseverything]

2. perfect example of why a free press is sooooooooooooooooooooooooooooo

IMPORTANT!!

[okaawhatever]

3. the head of the FBI has a lot of experience prosecuting financial crimes from his days as a US

attorney. I can't remember all his trials but I know he prosecuted ImClone, Adelphia and the Credit Suisse traders. He's got his white collar crime bona fides. I'm glad he's on this.

[cosmicone]

4. Someone who runs faster can catch a better seat on a train

and unless these firms have specific inside information, it would be silly to prosecute just for having a faster technology.

What is the solution? Everyone forced to use slow computers?

[tableturner]

6. High speed traders buy and sell based on their inside knowledge of what other traders buy and sell..

That is clearly inside information. It doesn't matter how they got it, whether from a friend or via interception of others' trades. It is still trading on insider information. They are finding out what others do before the trade goes into the system, which is information not generally available to all traders, and that constitutes using illegal information to decide what to buy and/or sell. Insider trading laws exist to make sure everyone trades with access to the same publicly available information.

[Munificence]

15. Good explanation but....

one should know that these are not "Humans" knowing insider information, but instead it's literally a computer program that gets the "inside information" via the running of complex algorithms.

We are talking milliseconds here that create an advantage in trading. No humans really trade stock anymore, it's for the most part all computer programs running on algorithms. Your 300 millisecond advantage in the time it takes information to hit you in NY vs the difference in some computer in Chicago is a huge!

HFT's are pretty much responsible for our "booming" stock market as via algorithms ...they have bid up this thing when it shou;d never be here.


To me this is Big....We are either gonna get a controlled crash in the market and a "bad guy (HFT'S) to lay the blame on verses the blame on the FED.....toss that in with the $242 billion in reverse repo's just purchased and something is coming.

[JDPriestly]

5. This is so important because the possibility that the high-speed traders are rigging

the stock market discourages a lot of small investors I suspect.

[Rod Beauvex]

7. Question.

Should all trade be done face to face?

[rickford66]

8. New rule

Stock must be held for a minimum of one minute. For sales short of a minute the fine would be one cent per second per share. BOOM!

[quakerboy]

13. Or a per transaction tax

[rickford66]

14. Yup

They'd think twice about a transaction making a cent per share if the tax was a cent per share. I think sales taxes are Constitutional. I know I pay them l the time.

[BadgerKid]

17. There's already on SEC fee when selling

stocks and options. This article would have you think it hasn't been enough.

[WestSeattle2]

9. You can bet Goldman Sachs is at the front of the line...

if there is a way to steal from the public, they have it figured out.

Liars and thieves who think they are "successful financiers".

Laughable. They all should be in prison. They're no better than street corner crack dealers. In fact they're worse; street corner crack dealers don't try to hide who and what they are.

[Munificence]

16. Hahaha

Goldman is on the front line...they are going against it now, now that they made their trillions from it!

Oh and right with Goldman are out politicians and the FED. There will however be a control crash of the market and the HFT's will be the fall guy or patsy so the masses never really understand what is going and was approved by .gov

[LuckyLib]

10. How this works and how it was discovered was outlined in a 60 Minutes piece last night.

Rigged? Uh, yeah. Ya think?

http://www.cbsnews.com/news/is-the-us-stock-market-rigged/

[Trust Buster]

11. This is another example of how Wall Street has stolen pension fund returns.....

.........then they turn to the teachers, policemen and firefighters and call them greedy. A proprietary computer reacting milliseconds ahead of a known trade is inside information. They call us class envious yet, all we want is a level playing field that they are determined not to provide.

[jmowreader]

12. Here's another bad part

High frequency traders don't even have to use any of their own money unless things go wrong.

The SEC says, thou shalt pay up no later than three business days after you complete the transaction. If you buy a million shares of Acme at 38.00 and sell it at 38.001 two milliseconds later, you never have to use money for this - you just collect the proceeds of the sale minus a small commission.