If you are reading this post you are either curious or a sophisticated insider who knows all about HFT – High Frequency Trading. While high frequency trading is often legal, there is definitely a dark side to the industry – folks who combine ultra high speed computers with early access to inside information about earnings or corporate news.
This week, New York Attorney General Eric Schneiderman warned hedge funds that engage in the “toxic combination” of making hundreds of trades with information in the few seconds before it becomes public. Schneiderman said, “When blinding speed is coupled with early access to data, it gives small groups of traders the power to manipulate market movements in their own favour before anyone else knows what’s happening. They suck the value out of market-moving information before it even goes public.”
Getting access to information from a wire service even a few seconds before it becomes public can make traders and hedge funds enormous profits. Regular investors don’t stand a chance. By the time the information becomes public, the HFT traders using inside or “pre-released” data have already profited from the information.
High speed trading has been under scrutiny since the infamous computer glitch that caused markets to free fall for a few minutes one day in 2010. Since this summer, the toxic combination of combing HFT with early release of data has come to light. Regulators aren’t happy. Already, one news service, Thomson Reuters, has agreed to stop its practice of giving information to HFT traders a few seconds before it becomes public.
SEC Whistleblowers Program
The law firm of Mahany & Ertl represents whistleblowers in SEC, IRS and federal False Claims Actions. Under the SEC’s whistleblower program, folks that come forward with original source information about a possible violation of the federal securities laws that has occurred, is ongoing, or is about to occur are eligible to receive a reward of between 10 and 30% of whatever the government collects. The information provided must lead to a successful SEC action resulting in an order of monetary sanctions exceeding $1 million.
In most every case, the identity of the whistleblower is kept confidential. The information can also be submitted anonymously.
Whistleblowers serve a crucial role in fighting fraud and keeping markets fair. Even if you have information about a hedge fund or trader that recently stopped the practice, the SEC’s whistleblower program allows claims for past violations.
If you have inside information about HFT trading utilizing inside or early released information, we want to speak with you. For more information, contact attorney Brian Mahany at or by telephone at (direct). All inquiries are kept in strict confidence.
Mahany & Ertl – America’s Fraud & Whistleblower Lawyers
Post by Brian Mahany, Esq.