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FBI Investigates Stock Market 

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Old 04-04-2014, 12:46 PM
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FBI Investigates Stock Market

Concerned about possible insider trading, the Department of Justice is investigating the "high-frequency trading" practiced by some investors, Attorney General Eric Holder confirmed Friday.

Holder's acknowledgment comes on the heels of a report from CBS News Homeland Security Correspondent Bob Orr that the FBI is probing the practice to determine whether high-frequency traders are using a speed advantage to tilt investment markets in their favor.



FBI begins a criminal investigation into high-speed trading
"In the financial sector, concerns have been raised recently about a practice called 'high-frequency trading,'" Holder said during testimony before a House Appropriations subcommittee. "The practice, which consists of financial brokers and trading firms using advanced computer algorithms and ultra-high speed data networks to execute trades, has rightly received scrutiny from regulators. I can confirm that we at the United States Department of Justice are investigating this practice to determine whether it violates insider trading laws. The Department is committed to ensuring the integrity of our financial markets, and we are determined to follow this investigation wherever the facts and the law may lead."
The concern is that some traders could be using information that they receive just a fraction of a second before everyone else to decide what to buy and sell and when -- and on Wall Street, where milliseconds can mean millions, that could provide quite the advantage. Critics have said that high-speed traders are able to see the orders of other investors before those orders are filled and execute trades that result in high profits for themselves and higher stock prices for everyone else.


"60 Minutes" investigates high-frequency trading
In his new book "Flash Boys," author Michael Lewis warns that a group of high-frequency traders have effectively rigged the market to their advantage by using computer software not available to smaller investors.
Lewis spoke to "60 Minutes" about his book, telling CBS News' Steve Kroft in no uncertain terms that "the United States stock market, the most iconic market in global capitalism, is rigged...by a combination of these stock exchanges, the big Wall Street banks, and high-frequency traders."

The victims, Lewis said, are "everybody who has an investment in the stock market."

At over 60 public and private exchanges throughout the U.S., thousands of computers are executing trades at speeds far beyond human capability, far too quickly to be recorded on a stock ticker or computer screen.

"The insiders are able to move faster than you," Lewis explained. "They're able to see your order and pay it against other orders in ways that you don't understand. They're able to front run your order."

"What do you mean 'front run'?" Kroft asked.

"Means they're 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 said. "It all happens in infinitesimally small periods of time. There's speed advantage that the faster traders have is milliseconds, some of it is fractions of milliseconds. But it's enough for them to identify what you're gonna do and do it before you do it at your expense...So it drives the price up, and in turn you pay a higher price."

N.Y. attorney general on high-frequency trading: "Some of it may be illegal"
What's not clear is whether the practice is illegal, but that possibility became more pronounced on Friday with Holder's confirmation of a federal investigation.
New York Attorney General Eric Schneiderman and the Commodities Futures Trading Commission had already launched their own investigations into the rapid computerized stock trading, which now comprises over half of total bandwidth of the market.

A law enforcement official told CBS News' Orr that the investigation actually began last year, and due to the complicated nature of the issues involved, it could take many more months before it reaches any conclusion.

videos:

http://www.cbsnews.com/news/attorney...speed-trading/




not surprised.

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Old 04-04-2014, 08:03 PM
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Re: FBI Investigates Stock Market

Wow, what a shocker. The real surprise would be if they investigated and found ANYTHING about the market that isn't corrupt. The very foundation of the stock market requires dishonesty in order to keep it running. Much like the court system and lawyers. If they were honest and told the truth, the whole thing would fall apart in a day.

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Old 04-04-2014, 08:20 PM
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Re: FBI Investigates Stock Market

Quote:
Originally Posted by azdesertsnake01 View Post
Wow, what a shocker. The real surprise would be if they investigated and found ANYTHING about the market that isn't corrupt. The very foundation of the stock market requires dishonesty in order to keep it running. Much like the court system and lawyers. If they were honest and told the truth, the whole thing would fall apart in a day.
what would be shocking is if they found it and actually stopped it lol

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Old 04-04-2014, 08:32 PM
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Re: FBI Investigates Stock Market

I have noticed after MANY years of watching things play out that it NEVER works that way. At best, there is a fall guy or two if the public is crying out loudly. If not, then a few hearings on the issue, questions asked, lies told, and everyone goes home. The public has an INCREDIBLY short term memory.

I have actually recently came to the realization that the only way there will ever be justice in the world is if the entire system morphs into something new. Not just a few changes of politicians, judges, etc.

The system itself is corrupt. It's like trying to repair an old rusty car body. It can't be done, you have get a new one and start fresh. It will take a world changing movement to ever change things.

The only idea I have heard that makes sense is related to the Zeitgeist movement and The Venus Project. They are an optimistic viewpoint of the future, but it would be nice. In some ways we are being pushed toward those ideas automatically though.

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Old 04-04-2014, 08:35 PM
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Re: FBI Investigates Stock Market

Az, we will never see honesty and progress as far as the govt and stuff like this, its gona be long after we are dead and honestly, Im not sure improvement will ever be
I think the only reason we are the only life on a planet in this galaxy is because we are less advanced (scary thought) then those who lived before and I truly believe we are last to go. Slowest self destruct ever.

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Old 04-04-2014, 08:58 PM
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Re: FBI Investigates Stock Market

Exactly. That's my point, the whole system is corrupt. So the only way to change it is for the whole system to be changed. NOT simply the people in certain positions, but the entire way things are set up. That's why I laugh at people when they run to the voting booth thinking they are changing things. We've had hundreds of years of the "change" that voting has brought. And here we are! How has it worked? Lol.

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Old 04-05-2014, 03:05 PM
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Re: FBI Investigates Stock Market

It's happened many times. 20 or 30 years in prison for the guilty if they don't cooperate. It becomes a bees nest.

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Old 04-05-2014, 08:52 PM
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Re: FBI Investigates Stock Market

The only justice will come when they sling the judges, police commissioners, lawyers and politicians from the highest mountain a country has to offer. Traders with no soul are up there too.

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