High-Frequency Trading CSI: What's the FBI Doing?

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April 1 (Bloomberg) -- Federal agents are investigating whether high-frequency trading firms break U.S. laws by acting on nonpublic information to gain an edge over competitors. Attorney Doug Burns speaks on Bloomberg Television’s “Bloomberg Surveillance.” (Source: Bloomberg)

Clerks are getting ready to place a big institutional orders.

The call friends and colleagues and tell them and the friends and colleagues trade in front of the order.

Now, what the fbi is looking at is these complicated algorithms and computer programs that give split-second edges across the board.

Does that violate the law?

What they will do -- it will be extremely difficult.

There has been way too many over generalizations.

I don't want to call out the author of flashpoint.

To say the market is rigged is way too overgeneralized.

We have to break down and look at these programs and see who has specific advantage over other traders.

So the fbi is in the knowledge business right now.

They're trying to get smarter about these processes.

Please explain why this is important to the average american who probably has never placed 100,000 share orders in their life.

When you have a journalist writing a book that says the market is rigged, that gets main street and the average investors' attention.

What is going on here?

What the fbi wants to do is break down the argument.

If some people have said that high-frequency trading creates liquidity.

You have seen all of the articles and i've looked at them in the new york times.

I saw what arthur had to say about this.

There are good actors and bad actors.

The reality is, the average person wants to know, when i'm making trades, am i laboring at a disadvantage?

The jury is out.

We don't know that yet from a legal standpoint.

Other people have overgeneralized and said this is legal and they need to change the regulations.

It is case-by-case specific.

If you can show that in a particular instance that somebody traded ahead of others, there could it could be illegal.

You described mr.

Lewis's assertion that the market is rigged as overgeneralized.

Why do you say that?

How can you turn around and reduce hundreds of thousands of complicated trading principles that go on every day and come out and say, the market is rigged?

That's journalistically controversial.

I think it's a bit irresponsible.

Before we say thank you and goodbye, if there is some sort of smoking gun out there in the data, what would it be?

That's a great question.

I think the smoking guns are always things like e-mails.

Traders and executives get reckless and they e-mail each other and say, wow, we just made this a killing because we had that information.

Things like that.

The bad news is that it's very complicated.

You will need real fbi computer experts.

Thank you so much.

We will do whatever we can on

This text has been automatically generated. It may not be 100% accurate.

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