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Here Come The Feds: FBI Probing HFT
It is perhaps little wonder that Virtu was in such a hurry to use the cover of the JOBS Act to IPO itself before the whole HFT 'game' was exposed. Just 5 years after we first drew the world's attention to the potential damage that HFT could do; and mere minutes after we posted our article on how HFT is being set up to be the scapegoat for all that is broken with the market and conveniently distracting from the Fed, and god, or perhaps his agent on earth Goldman Sachs, 'completely unexpectedly' sends in the FBI:
- *FBI SAID TO PROBE HIGH-SPEED TRADERS OVER ABUSE OF INFORMATION
- *FBI Working With SEC, CFTC in High-Speed Investigation
- *FBI Investigating Whether High-Speed Firms Trade on Nonpublic Information
Now, the question is: how many HFTs will stop trading for fear that any further trading on 'non-public information' will be deemed criminal from this point... or keep trading and lobby/hope that "a reasonable man" will believe their liquidity-providing lies.
Bloomberg reports,
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.
And since the FBI can't be expected to know much about what it is actually investigating, considering the entire farcical investigation apparently was triggered by a Michael Lewis book and/or an anonymous phone call from Goldman Sachs, it would be nice if traders actually did the FBI's work for them. Pretty please:
An FBI spokesman tells me: "we want people to contact us." Says traders with tips about HFT should call 212-384-1000
212-384-1000 .
— Eamon Javers (@EamonJavers) March 31, 2014
That's right: if you or your loved ones have been hurt or injured by HFT, please call 212-384-1000
212-384-1000 . How would you know if you have been hurt or injured by HFT? Don't worry, you will - it's like porn.
Basically the Feds just asked anyone who has lost money in the last 5 years to give them a ring.
To quote Hans Gruber, "You ask for miracles, Theo, i give you the FBI."
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LMFAO!
They have been defrauding the public.
i hope to see more bankers trying to fly tomorrow morning
Bullish for nail guns!
I think its time for a bankster belt-sander "accident"
Banker suicide by GM power steering failure in 3, 2, 1 ...
Whats a harmless penny or two among friends?
HFT has been around a long time, wonder why they are doing this now, something is going on
I'm waiting for the drill press suicide
Heard from just outside the HFT data center:
"Quick, turn those machines on low speed! They'll never suspect us if we disguise ourselves as an LFT shop."
"As Obama says, “Let me be clear.”. I am glad 60 Minutes decided to take a look at this issue. It deserves a lot of media attention and questioning. However, 60 Minutes failed to look deeper into why things were the way they were. They gave the SEC a pass. Senator Ted Kaufmann did make some good points, but again, failed to get to the meat of the matter."
http://pointsandfigures.com/2010/10/10/60-minutes-and-high-frequency-tra...
Yup...
This is the most scripted shit show yet. Info has been out there for YEARS. Now there's a 60 Minutes segment (MSM) and an FBI investigation the next day. It's like they're just rolling out their new marketing campaign or something.
Yeah, let's NOW, AT LONG LAST go after the guys scalping a penny a trade, while diverting attention from the REAL problem. Fed wasn't mentioned, SEC wasn't mentioned, CFTC wasn't mentioned. No government agency or their policies that allowed and ENCOURAGED HFTs to exist in the first place.
I think it just no longer serves their purposes. Virtu IPO makes this game avaliable to everyone and they either want to prevent that, or now that it's becoming less profitable use it as a nice distraction and good PR for the SEC / FBI. "see we're on your side, promise"
As Tyler has mentioned, the Golden Age of HFT is over, having run all of the carbon-based traders away.
In the year 2014
The Fed's will extort fine Goldman Sachs $3 Billion and they will happily pay the extortion fee fine. What's a $3 billion dollar loss when you make trillions of HFT.
Time to put yer avatar to good use! :>D
Does anyone even expect any politicians to understand this shit anyway?
More importantly, who does one call if injured by The Federal Reserve? BC that's almost everyone!
Call Vinnie or Mario. They and their friends are good at 'fixing' things.
Fuckin' A!!!!
"Um. Hello, Vinnie? I have a problem."
It's all about the Virtu IPO "Can't have the little people having the same odds as the house, shut it down boys."
Ummm... no. The IPO is out due to the fact that the scam isn't working anymore.
IPOs are NEVER for the little people.
IPOs are NEVER for the little people.
I would say they aren't good for the little people, but they most certainly are for the little people. Look at the the dot.com bubble when even grandma was buying IPO internet stawks. Good idea? no, but that seems to be what regular people get excited about, look at facebook and twitter.
And HFT is becoming less profitable, but still out there. Although I agree they are probably starting the investigation at this late date because it's nearly a dead horse.
*FBI Working With SEC, CFTC in High-Speed Investigation
Will they all share the porn sites, or fight for them??
So who's monitoring the SEC, FBI and CFTC??????????
It's official! Goldman Sachs rules the world! I bow down to you Lord Business. I hope my loyalty will result in extra allotments of gruel.
WOW, there just starting to look into HFT, maybe they should go on to ZH for all the evidence the Tylor’s provide on a hourly bases.
these .gov types are all ass hats
Commence hard drive purges in 3... 2... 1
The bear market is coming and a scape goat must be found!
HFT in 2016= Subprime in 2008
I'm sure HFT is well contained and won't affect the broader markets or eCONomy.
-Yelnanke
Someone needs to call the tipline and give them the 5-year old ZH article
Anybody get a feeling this Michael Lewis book launch and story is manufactured? I like him and I think he is pretty honest but this is how I see this going down.
Uncle O Sam obam has known since 2008 that the public is getting ripped off. The public gets fleeced in the markets for tenbs of billions. Then a clever Royal Bank of Canada trader figures out what EVERY hedge fund manager already knew. They come up with a clever way to go around the HFTs and put them in a loop. The reality is they just stop sending their orders to BATS.
Small fish will be indicted, lawsuits where investors get a certificate for a free Big Mac, Uncle Sam Obama gets $3 billion in fines that go around the Treasury to his retirement plan and the DNC. Attorneys suing the HFT firms get tens of millions in fees. Michael Lewis book goes to Number 1, the Canadian Asian guy who "figured it all out" along with his Mick telecom pal are Heroes! Yeah! In the background, the real face behind this exchange (Goldman) stays hidden.
Meanwhile, the public aka small investors are still f**ked.
So, I guess the FBI finally reviewed ALL the pr0n on the intertubez, and are now zipping up and getting back to what the taxpayers pay them for! :>D
Oh they are going to investigate. Never said they will do a thing about anything that they find. Party on Garth!
It depends. Is this kabuki theater, or is somebody getting thrown under the bus?
sounds like HFT gets to be the problem that gets fixed... after that, everything back to normal. go back to sleep little sheeple.
FBI: <knocks on door> What's the frequency Kenneth?
HFT guy: I'm a High Frequency Trader.
FBI: You're the guy we've been looking for. We're investigating High Frequency Trading.
HFT guy: I just smoke some weed and trade a lot. Is that illegal?
FBI: How frequent do you trade?
HFT guy: Like two or three trades per day...when I'm not smoking a joint.
FBI: You do know that smoking marijuana is not very good for you.
HFT guy: Yeah I know but it's the only way I can keep my sanity since I keep losing money to these firms that do computer trading using algorithms.
FBI: Understood. Have a nice day.
FBI: <on phone> Hi Boss, we just finished our investigation. Nothing to report. Just a guy who gets high who trades pretty frequently.
Sounds like somebody may be having an uncomfortable encounter with the tires of a bus here.
Gives a whole new meaning for dropping like flies.
Oh sure, Top Men on it, the guys who found the Ark of the Covenant.
Wait...
I'm shocked!
(your winnings sir.)
"Round up the usual suspects!"
If this is true, that the FBI is investigating HFT after a short story author goes on TV to promote a book, the USA is dead as we know it.
This is laughable.
Wait a sec, WHAT does HFT have to do with "National Security?"
Ya know it's bad when even the FBI can't keep their story straight!
Did Uncle Scam just pull the plug out from the punchbowl ?
I hope so but I'm thinking Eric Holder will save their arses
I wouldn't hold my breath that Uncle will be plucking any turds out of the punchbowl.
Oh look a "special investigations" unit has been formed and fully funded by an undisclosed outside entity. Looks like we do not need to look any further into this silly HFT business...
The SEC issued this statement in response to the Fed's investigation.
https://www.youtube.com/watch?v=5NNOrp_83RU
the squid told the fbi to do this. the fbi works for the squid. free sergey. bitchez.
D'oh!
"Says traders with tips about HFT should call 212-384-1000."
Damn right! Gotta prosecute those whistle-blowers to the FULLEST extent of the law! /s
They will find no impropriety...after millions spent on a snipe hunt. Remember from which the credit flows..
Well at least there will be a 700 page report.
Why didn't Goldman wait until AFTER the Virtu IPO?
So bad news for Gold ???
/Sarc.
The primary prerequisite for employment at GS aka Squid, is that you have (2) faces and know when to use each at the appropriate time...
Another prerequisite: The most guilty always tries to act the most innocent by requesting an investigation.
why does court on the planet of garbage come to mind
guilty, or innocent
innocent - feed them to the sharkacons
For fucks sake! For what, a pretend stamp of approval? Double jeapardy? Fuck them!
Perhaps the FBI will investigate how it was that Martha Stewart did time in a Federal Pen, while John Corzine walked away a free man.
Martha doesn't wear WH cufflinks.
Martha won't swallow . . . John will.
In Maddeline Kahn's voice from Blazing Saddles- 'Oh Hooway...our hewo's'.
So, like, doesn't the NSA splice into the HFT cables and servers? One would think so...or do they just patch straight into the DTCC up on Water St.?
Bytes are speech
Bytes are speech
Next thing you'll be saying is that corporations have the same rights as people . . . .
It takes 60 Minutes for the Fed to respond? ZH gets no respect.
Feds*
Im sure that if there is a true problem, Hank Paulson and Tim Geitner will come riding in to save the day.
There they go again.
How many times have they said, "We can't comment on _______ due to the ongoing investigation." ?
Now nobody can find out anything, for three years at which time nothing actionable will be found.
Retroactively claw back profits made by HFT from the date Island ECN was first created and disperse it back into pension funds, from where most of it was effectively skimmed. Should be good for kicking the pension Ponzi can down the road for, I dunno, about another 2 months or so.
This is all such bullshit. One author telling us what many of us have know for the better part of a decade and the FBI gets involved. Don't worry about banks, government officials, and SEC employees all trade on insider information. Don't worry that the privileged few get information prior to everyone else. Don't worry that markets have been manpiulted for decades. I'm not defending HFT, but come on our system is rotten to the core and all of a sudden, the FBI gets involved with HFT? The FED has manipulated the global markets since 1913, so please, give me a break. 79 convictions, obviously low level programmers and nobody of real consequence.
Your odds are nowhere near attractive enough for anyone around here to take that bet.
Couple of wrist slaps, finger wagging, "you've all been very naughty boys", a scapegoat settlement out of court in which a firm pays a "significant" fine that's no more than 5% of the profits it made, some rotation of jobs between HFT firms and regulators, then it's all back to business as usual.
Heaven forbid that the Feds actually shut this racket down. Won't someone think of the childr...I mean, liquidity?
That's funny because I had to ammend my statement. Knowing that 10-1 probably was way to low, i just deleted that whole sentence. How about 25-1 that nobody of consequence gets any serious jail time.
If the Fed is 'looking into' HFT, it's because they see it as a potential problem for the Fed, and no other reason.
Lets not get the Federal Reserve and the FBI confused now...
see above comment about one arm of the squid being tasked to investigate another...
My goodness what impeccable timing!
Right after the nationally televised "60 minutes integrity stunt" with Michael Lewis... And the only reason CBS decided to air it is because their ratings have been in the shitter for too long and they are losing money on the show. Much for the same reason MSNBC broke with tradition in this story. They are being honest for a change not out of choice but more of necessity!
Hemorrhoids feelin' any better America?
Line the bums up against the wall and gun them down!!!
Confiscate their stolen assets
See comment above about Sharia Law.
Blah blah blah, the dumb FBI is now getting on the train? Get outta here, please.
This is all media stunt BS. And it is only gonna bring one thing: even more fragility in the markets, as HFT/algo players will be forced to resort to new, more subtle and certainly more extreme methods to keep their game going.
And as someone else mentioned here, HFT will be the "scapegoat" for the next inevitable bear market. How convenient.
The sociopaths really are guarding the hen house. Oh boy!!
Of course, the investigation is NOT whether HFT is legal or abusive of the system, but rather whether they are trading on non-public information. Good luck tracing that through the HFT trading desks.
Electrons never rat out their masters. It's like Omerta.
Instead of $6 billion fines, the better solution might be Sharia law applied to those who steal via HFT. A different way to think about missing digits.
Would they have their right hand cut off for stealing? Or would it be castration for the butt fucking rape they committed?
HFT should be illegal.
60 Minutes did a piece on HFT a couple of years ago, but it was more like the fluff piece they did on the NSA, They trotted out a bunch of Indian guys who exclaimed how smart they were, and in their best stereotypical Indian accent, they all said "We provide the liquidity the market needs."
Brawndo™! Its got what stawks crave!
what makes anyone think they will find anything since the biggest financial crime in my memory stymied them ala Jon Corzine and the 'one witness'
HFT = front-running scumbags
.
That was pretty obvious from day one. Any program which makes trades based on orders being placed and circumvents those orders is front running.
Since they let it go on for so long, i can only come to the conclusion they shut it down before the markets turn the other way. Front running the downside in the fashion of the last few years of HFTwould be pure havoc for the averages. .
Yep! Take gold/silver for example.
Basically the Feds just asked anyone who has lost money in the last 5 years to give them a ring.
Fuck them. It was the Government's money that I lost.
"provide liquidity" = buy ahead of your order and sell it back to you at higher prices
Once HFT is turned off all that "money on the sidelines" will finally come back into the markets.
Bullish!
you gotta love this rotten corrupt country!
My advice is to sharpen your knives, polish your silver, kick back and wait.
Seriously? Haim Bodek's been bitching and screaming about this for years. Maybe he should call the FBI hotline just one...more...time...
So basically front running orders is OK, if you're a BANK, but since your HFT computers are faster than our HFT computers the FBI must investigate.
Flash,uh,I mean,false alarm. Nothing to see here, move along.
And who investigates the FBI?
Don't worry, congress will call up a special panel of poiticians to write a report about it, then classify half of what's in it, then seal the rest for 50 years. See how easy that was. Case closed.
If its anything like their domestic terror investigations, the FBI is going to have to set somebody up first.
This will go nowhere.
HFT to me is like sub prime mortgages - legal but wrong. But legal. No need to waste more taxpayer $ on this bullshit.
It was refreshing to see Mark Cuban tell those jerkoffs what the real deal is. I wish I had enough fuck you money...
Fuck you FBI! FBI, fuck you!
Last one to call this a "crisis" is a rotten egg.
I thought FBI is busy probing those who make $5 on a trade?
FBI and J Edgar says: "Banks are an almost irresistible attraction for that element of our society which seeks unearned money."
SEC says: "Someone needs to take the filters off the gay trannie midget porn"
CFTC says: "We don't have a definition of HFT"
WOW, between the 3 of them they need to drag along NASA, NSA, State, HHS, EPA, CIA, etc... and find a cure for this global climate change!
I picked the wrong week to give up sniffing glue!
https://www.youtube.com/watch?v=GeI5ke0BENwr
somehow I dont think the missing link of a viable solar model would help much - but it would get rid of any rationale whatsoever for the government to decide it needs to tax your exhalations.
Do you think it worth the dime to complain about HFT and my losses on Gold coins I had to sell during this non-recession and horrible jobs climate?
It won't matter anyway. The HFT Boyz will take it like JPM. They'll just pay the pittance of a fine and never admit to any wrongdoing.
and acutally divert some staff from large scale data collection off of fuckbook? Not a chance in hell. .01% will tell them PDQ nothing to see here move along.
<= Yellen is looking for a new finance strategy.
<= Eric & Barry & Billary & Henry are looking for a new scam