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Post says FBI joins SEC in high-speed-trader scrutiny

2014-04-02 07:18 ET - In the News

The Financial Post reports in its Wednesday edition the FBI is making an unusual public plea for financial-industry whistleblowers. A Bloomberg dispatch to the Post says the FBI joins a roster of authorities examining high-frequency trading, in which firms use superfast computers to post and cancel orders at rates measured in thousandths or even millionths of a second to capture price discrepancies. The FBI hopes whistleblowers will be able to show misconduct on the part of some traders. The FBI's inquiry stems from a multiyear crackdown on insider trading, which has led to at least 79 convictions of hedge-fund traders and others, including several linked to SAC Capital Advisors. Agents are examining, for example, whether traders abuse information to act ahead of orders by institutional investors. Market regulators have asked for years whether new restrictions on rapid-fire trading were needed. Daniel Hawke, who heads the Securities and Exchange Commission's market-abuse unit, said in 2012 the agency was examining practices such as co-location and rebates that exchanges pay to spur transactions. Last year, the Commodity Futures Trading Commission said it would review speed trading and sought industry input.

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