FBI to investigate high-frequency trading firms

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Federal agents are investigating whether high-frequency trading firms break U.S. laws by acting on non-public information to gain an edge over competitors.

Bloomberg reports that 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, for example, whether traders abuse information to act ahead of orders by institutional investors, according to an FBI spokesman. 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 access the complete Bloomberg article hit the link below:

FBI Probes High-Frequency Trading Firms for Abuse of Information

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