[Infowarrior] - FBI Probing High-Speed Traders Over Abuse of Information

[Richard Forno]

FBI Said to Probe High-Speed Traders Over Abuse of Information

By Keri Geiger and Patricia Hurtado 
Mar 31, 2014 5:48 PM ET
http://www.bloomberg.com/news/2014-03-31/fbi-said-to-probe-high-speed-traders-over-abuse-of-information.html

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.

The FBI joins a roster of authorities examining high-frequency trading, in which firms typically use super-fast computers to post and cancel orders at rates measured in thousandths or even millionths of a second to capture price discrepancies. New York Attorney General Eric Schneiderman opened a broad investigation into whether U.S. stock exchanges and alternative venues give such traders improper advantages.

To contact the reporters on this story: Keri Geiger in New York at kgeiger4 at bloomberg.net; Patricia Hurtado in Federal Court in Manhattan at
pathurtado at bloomberg.net

To contact the editors responsible for this story: Sara Forden at sforden at bloomberg.net; Michael Hytha at mhytha at bloomberg.net David Scheer


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