SEC Has Opened Several HFT Probes

Tyler Durden's picture

To think all it took to wake up not only the FBI (which generously provided a phone number to all interested parties so others could do its work for it) but the porn-addicts at the most corrupt, complicit and clueless, not to mention bought and paid for, "regulator" in US history, the SEC from a five year slumber - yes, we started warning about HFT in April of 2009 - was one Michael Lewis book. Moments ago we learned that the SEC, with a five year delay, has opened several investigations into HFT.

Below is an artist's rendering of just what these probes look like:

From the WSJ:

Ms. White, testifying before a House Appropriations subcommittee, said the SEC currently has "a number" of ongoing investigations regarding "market integrity and structure issues, including high-frequency traders." She declined to provide specifics about the investigations, but said they have been under way for "quite some time."

And now, please hold for laughter:

"We're very much focused on any abuses in that space," she said.

Ok, now you can laugh. And laugh some more:

The SEC and the Commodity Futures Trading Commission are looking into ties between high-speed traders and major exchanges, examining whether the firms are getting preferential treatment that puts other investors at a disadvantage, people familiar with the probes said Monday.

Since we feel generous, here is a place to start: several hundred articles covering precisely what you should have been investigating 5 years ago! And since we know you are budget strapped, we won't even ask for our finders fee for having been the first to expose the scam that is HFT - we realize that all those porn subscriptions cost a pretty taxpayer penny.

Then again, not even we are dumb enough to fall for the lie that the SEC is actually going to finally do something about HFT:

Ms. White acknowledged the SEC is in the midst of a policy debate on whether the speed and complexity of trading in stocks and other securities pose risks to markets. She said the SEC's approach on the issues would be "data-driven and disciplined." She stopped short of embracing any policy shifts.


The review of the guts of the stock market follows a string of market breakdowns, such as last year's failure of the Securities Information Processor, a computerized link that transmits market orders to the public and is overseen by the Nasdaq Stock Market.

Why? Because since hundreds of current SEC employees can't wait to quit their job in the glorious tradition of the SEC revolving door just so they can find a much higher paying job doing nothing at the same HFT firms they were supposed to be policing, and because it is the HFT lobby itself that controls the SEC (recall that SEC Uses HFT Firm-Designed Tool To Find That HFT Doesn't Cause Flash Crashes), only an idiot would fall for the same lie again and again. Especially since Mary Jo White will have to promptly recuse herself from this investigation: after all the bulk of her former clients at Debevoise, especially Morgan Stanley, are some of the most flagrant abusers of HFT.

As for retail investor "confidence" in capital markets, that ship sailed long ago. Because no matter how high the rigged market closes day after day on increasingly worse economic news, they are never coming back, period.

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fonestar's picture

But what will the SEC do about Bitcoin?  Oh, the same as your "government"?

Hahahahahahahaha AAHahahahaha Ahahahahahaha!

SilverIsKing's picture


AlaricBalth's picture

And where was Bart Chilton? In 2012 he was pandering to his audience at the HFT Leaders Forum.

An excerpt: "Well, there won’t be too many lulls in our conversation today, and I really am very excited to be with you—party time, excellent."

Full Keynote Address of Commissioner Bart Chilton Before the High-Frequency Trading Leaders Forum, Chicago, IL

Pure Evil's picture


Just think.

If Tyler had binded up all the articles he's wrote on HFT since 2009 and printed off a book, he'd be the one getting all the attention.

So why does Michael Lewis get all the accolades for just writing a book?

I guess it's pretty easy to travel on cruise control from coast to coast when others have already built the highway.

LetThemEatRand's picture

There is absolutely Zero Doubt that all of these announcements about "investigations" are merely to placate the public, so the average guy doesn't ask the obvious question of why they are not doing anything about it.  Say you're investigating, and then prosecute a few "bad apples," and the story dies a quiet death.

fonestar's picture

What was that about Rand Corporation?

kliguy38's picture

like someone said earlier.......HFT may be shit......but the noise is to divert you from a bigger pile of shit and thats the WHOLE market is rigged......throw the peeps a bone and let them think its getting cleaned up....hahahahahaa

LetThemEatRand's picture

Yes, somehow I don't think those FBI and SEC probes into the few small time bad applies who will take the fall, are going to touch where the money is coming from that the "bad applies" are skimming.

SAT 800's picture

Now, don't be like that; they're from the Government and they're there to help you.

Pure Evil's picture

Don't expect them to dig to deep or explore too many trails.

All holes and paths lead back to the FED.

DaddyO's picture

Look. the croupier got caught cheating and the pit boss is obliged to change out the bad dealer.

In a few hands, the players will have forgotten completely about the cheater.

I would think that the house started to become more aware of the low crowds at the tables and decided it was time for a new marketing scheme.


Unknown User's picture

They broke a commandment "thou shalt not steal from the banksters", and now will be made to atone for their sins...

pizzedoff's picture

No, Expect a 6 year investigation and then they will blame it on rouge programmers within each company that does HFT

eclectic syncretist's picture

Yes! HFT morphed into a monster wherein the small investors have been eliminated, the big investors no longer trust the system, and the banksters with their HFT platforms have been left to parasitize each other.  This is against the Fed's true (and covert) mandate to enrich the big banks at the most widely possibly dispersed cost to everyone else (essentially the Fed exists to support and publically legitimize bankster parasitical skimming from the earnings of the populace). 

Since HFT is now impinging upon the Fed mandate, it will be utilized as the sacrificial lamb scapegoat for what the banksters are about to unleash upon us.

hobopants's picture

Retail won't return no matter what show they put on because retail is flat ass broke. They've run out of cattle and now will have to turn cannibal. Bets on which bank eats which?

Pure Evil's picture

I sincerely doubt HFT will be eliminated in its entirety.

I think the FED just doesn't like competition.

It's not starting to look good when HFT trading firms are being IPO'd.

Eventually there will be one on the corner of every block just like Cash For Gold stores.

Can't let the little guy in on the scam ya know, they're there to be fleeced.

HFT may be scapegoated if the market crashes and then regulated out of existence for the little guys, but HFT is a FED monetary policy tool to be used by its Wall Street banks, or in everyday parlance, its owners.

HardAssets's picture

The whole freakin' system is a fraud run by criminals.

Who cares about their coming HFT 'investigation' cover-up. That's small time. Ho-hum. Nothing of substance will come of it. We know that, don't we ?

The BIG cover-up for the whole rotten economic/political/gangster system will likely be another major war. Given how bad theyve made it, WW3 is out there on the horizon somewhere.

Thats the tactic they usually use to divert attention from themselves.


Ralph Spoilsport's picture

The public has already been distracted away from this by a shiny object carried away by a squirrel. When I asked some people what they thought about the HFT headlines, most all of them said the market is doing great so WTF.

SAT 800's picture

Great picture of the Government Employee at his "keyboard". Precious.

MeelionDollerBogus's picture

I'm surprised they're not sleeping at their desks until overtime kicks in.
Oh, is the SEC located in Detroit?
Wait, their work ethic is much stronger at the SEC. Before overtime hours kick in they'll be streaming porn and wide awake.

booboo's picture

"Gentleman, something has to be done about this, we gotta protect our phoney baloney jobs...hey I didn't get a hurumph out of you"

mbutler101's picture

I don't know who I despise more, the SEC or the CFTC...

slotmouth's picture

How to get rid of HFT, stop busting trades.

Evil Bugeyes's picture

This is a big deal! In several years some of the worst offenders might just be forced to pay several dollars in fines.

nmewn's picture

Darcy Flynn could not be reached for comment.

gimli's picture

Tyler, change the site's name to Michael_Lewis@Zerohedge ..... 

You may even get an interview on BloomingOnionBerger

khakuda's picture

Fuck Wall Street and the Fed for bringing blatant thievery and bubbles back so quickly after the debacle of 2008.

Maybe the Fed should've been watching this shit all along instead of printing almost $5 trillion and fucking savers out of interest.

Dewey Cheatum Howe's picture

The fucking trading system is automated is it not. All trades have to pay a transaction tax right off the top once they get placed. Problem solved when that transaction tax costs more than they can make skimming .0001 pennies at a time. All trades, all firms no exceptions no do overs once a trade is fired off.

MeelionDollerBogus's picture

As if they won't find a way to ding the rest of us with those fees by changing the spreads on what they re-bid? They will.
Just disconnect their wires & enforce that no one can be allowed to front-run. Do it & go to jail. It is illegal.
We don't just tax what's illegal, jail time should happen.

TaperProof's picture

Looks like the easy HFT money days are over.  In about 5 years I mean.

Mine Is Bigger's picture

Maybe they can no longer sustain the artificial stock pump and want to blame HFT for the upcoming epic crash.

NaN's picture

Process Design Fraud.

What's the difference between a programmer writing banking software that puts a fraction of a penny in his account every time interest is calculated and a distributed stock exchange system that allows invisible front running for years? Not much. The former involves one person and the latter diffuses reponsibility and culpability so thinly that no one gets in trouble. 

This collective fraud hazard is an unsolved problem.



agent default's picture

They are either preparing for a huge market crash or the Fed is going to induce a market crash.  Either way, they are looking for someone to blame and scape goat.  They have put up with HFT for all those years, to pump the market, they even let GETCO to handle the GM IPO, and now all of a sudden they remembered that HFT is screwing the market?  Bullshit.  A crash is coming and they will blame it on HFT.  But, the zero volume rallies we have been getting all these years, is the economy improving, and not HFT.  Got it.

MeelionDollerBogus's picture

HVU, UVXY, both 11x inverse to the Dow & S&P500. Get'em  before they're hot. Dump 'em on a local peak unless you got balls to hold on for S&P500 = 1000 but... that's a personal call.

When SPY=100 expect HVU = (219/100 )11 or even (222/100)11

so 5,557.57 to 6,454.79 share price

Uncle Remus's picture

Of course, now that the party is over...

buzzsaw99's picture

Now I know the squid is behind this.

SilverIsKing's picture

Of course. That's why they are in on IEX.

TaperProof's picture

Truth is the market doesn't need actual humans trading any more.  Just robots.

Algosaurus Rex's picture

Investigations? Is this more change we can believe in?

f16hoser's picture

Headline (5 years from now): SEC has determined that HFT Platforms are fair and balanced. In other news, Head of SEC, has taken a new job with Knight Capital who runs the worlds fastest HFT Platforms...

Goldilocks's picture

The Monkees- Hey Hey We're The Monkees. (2:24)

I Write Code's picture

SEC, that's the conference with the great football teams?

Baby Eating Dingo22's picture

This must be a sign of a top

The lactation guards storm in just as the udders have run dry

Judge Crater's picture

Next you will see AG Holder announciing the indictment of Michael Lewis for criminally revealing proprietary information about high frequency traders, traders Holder calls vital to the marketplace.

Offthebeach's picture

Wonder if Lewis has a framing nail gun in his garage? ( insert Christopher Walken voice; " He could have an aceedent, or sumpthen." )