Fbi To Probe High-frequency Stock Trading

I don’t buy it.” Kashkari was referring to the “flash crash” of May 2010 when the Dow lost 1,000 points and regained them in 20 minutes, a move largely attributed to traders using powerful algorithmic software and high-speed cables. Kashkari, a Republican who headed global equities at Pimco, told CNBC he doesn’t think such practices can destabilize the markets, but that they don’t add any value to the financial system. Read More 3 Years Later: Learning to Live With Flash Crashes His comments come as financial journalist Michael Lewis caused a stir in the trading community Sunday night. During an interview on CBS’ “60 Minutes,” Lewis called the stock market “rigged” by a combination of investment firms, exchanges and high-speed traders. Lewis, the author of “The Big Short” and “Moneyball,” was promoting his new book, “Flash Boys: A Wall Street Revolt,” on the http://www.etftradingsignals.com/ rise of high-frequency trading. “I’m am worried,” Kashkari said.
Source: http://www.cnbc.com/id/101538618

Literally hundreds of millions of dollars are at stake. In the short term, this is a story about how Wall Street is yet again using new and extremely complex methods to make a buck. But in the long term, the outcome of this investigation could be another major shock to Main Street’s belief in the markets as a safe place to invest. My advice is to keep it simple. Buying the stock of companies you understand and believe in for the very long term will make high-frequency trading meaningless to your investing success. That said, if you own the stock of a Wall Street bank such as Goldman or JPMorgan, this investigation could result is a nice boost to trading revenue, and ultimately profit! 3 stocks to own for the rest of your life As every savvy investor knows, Warren Buffett didn’t make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling.
Source: http://www.fool.com/investing/general/2014/04/01/the-dow-is-tk-as-high-frequency-trading-comes-out.aspx

stock market is rigged by a combination of insiders stock exchanges, big Wall Street banks and high-frequency traders who can move faster than other investors. The Modern Markets Initiative , whose members are high-frequency trading firms, fired back Tuesday that the charges aired on 60 Minutes are inaccurate. “The markets are not rigged. Saying otherwise is a broad generalization that lumps the vast amount of good market behavior in with a few bad actors,” the group said in a statement. . #ICYMI – This morning, the @TODAYshow aired MMI's statement regarding #HFT and #FlashBoys .
Source: http://www.usatoday.com/story/money/markets/2014/04/01/high-frequency-trading-responses/7154347/

Jim Margolin, a spokesman for Manhattan U.S. Attorney Preet Bharara, declined to comment when asked if the office was looking at high-frequency trading. The FBI began focusing on high-frequency traders last year, before Schneiderman disclosed his inquiry this month. Market regulators have asked for years whether new restrictions on rapid-fire trading were needed. Daniel Hawke, the head of the Securities and Exchange Commission ‘s market-abuse unit, said in 2012 that the agency was examining practices such as co-location and rebates that exchanges pay to spur transactions.
Source: http://www.latimes.com/business/la-fi-fbi-high-speed-probe-20140401,0,868118.story

CBS News Critics say these high-frequency traders are able to see the orders of other investors before those orders are filled and then execute trades that result in high profits for the high-frequency traders — and higher stock prices for everyone else. It’s not clear that this kind of trading is illegal, but sources say the FBI will look into possible violations including wire fraud and insider trading. A law enforcement official says the investigation actually began last year. Because it is a highly technical and complex probe it will likely take months. Steve Kroft reports on a new book from Michael Lewis, “Flash Boys,” that reveals how a group of unlikely characters discovered how some high spee… As Steve Kroft reported Sunday on “60 Minutes” , this month marks the fifth anniversary of the current bull market on Wall Street, making it one of the longest and strongest in history.
Source: http://www.cbsnews.com/news/fbi-to-probe-high-frequency-stock-trading/

White declined to answer questions from Reuters on the sidelines of the hearing about whether the SEC’s probes are exploring similar topics as the FBI’s. The long-running debate about high-frequency trading intensified on Monday, after bestselling author Michael Lewis published a new book, “Flash Boys: A Wall Street Revolt.” The book contends that high-speed traders have rigged the stock market, profiting from trades made at a speed unavailable to ordinary investors. Proponents of high-speed trading have criticized the book, saying high-speed traders actually benefit other investors by providing liquidity to the market. For years, the SEC has been looking into high-speed trading and “dark pool” trading, which takes place away from major exchanges. Regulators hope to determine whether ordinary investors are at an unfair disadvantage to high-speed traders, who rapidly dart in and out of trades to earn fractions of a penny that add up to big profits over time.
Source: http://www.reuters.com/article/2014/04/01/us-congress-sec-highspeed-idUSBREA301RC20140401?feedType=RSS

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