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 [11]; 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 [12], 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 [13]
That's right: if you or your loved ones have been hurt or injured by HFT, please call 212-384-1000212-384-1000 . 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."