The $750,000 Whistle Blast

This week's champion truly embodies the gadfly spirit.

In case you were too captivated by the GOP Hunger Games campaign trail to follow the important financial news of the week, here's a quick recap to get you up to speed.

First, the big news of the week confirms what we already knew: This market volatility is getting serious. Just take a look at the annual Forbes list of rich people, which shows that several billionaires have gone missing. The list shrank to 1,810, down from a record 1,826 a year ago. Where did they go? Hard to say. Billionaires are always in the last place you think to look.

For example, don't go looking for them at lunchtime in the traditional New York haunts like Bobby Van's Steakhouse or Delmonico's. Anna-Louise Jackson, in an article that really makes us curious to see her latest expense report, did a grand tour of some of Manhattan's poshest steakhouses and found them largely deserted even by the eat-what-you-kill set with fortunes less than 10 figures. The ever-quotable veteran Wells Fargo Funds Management strategist John Manley said it best: “You don’t want to be the guy who was out to lunch when the boss went through trying to figure out who he didn’t really need.”

Hello, Do You Deliver?

This year's market gyrations -- the S&P 500 has averaged daily swings of almost 35 points -- means many on Wall Street are eating lunch at their desks.

Source: Bloomberg

Maybe all the city's financial titans have gone to church? That seems possible based on this Tom Moroney article about how Wall Streeters are pumping a lot of donations into Catholic schools. As he reports: "Donors not only demand accountability for what they’ve given but also increasingly want to help run things." In other words, don't be surprised to get pitched soon on some collateralized tuition obligations or something similar.

When it comes to the coveted Gadfly Trade of the Week award, however, one achievement stands out. MarketWatch brings us the tale of how Eric Hunsader, founder of the market-data firm Nanex and one of the most vocal critics of high-frequency trading, is being paid $750,000 by the Securities and Exchange Commission in the first whistle-blower award prescribed under the Dodd-Frank financial overhaul law. As that report says, the SEC won't say who the whistle-blowers are, but Hunsader provided this summary of coverage. 

Few people in the world fit the definition of "gadfly" better than Hunsader, and as you can imagine that's a compliment around here. If you weren't really sure what a gadfly is, here are the Oxford English Dictionary definitions:

1. A fly that bites livestock, especially a horsefly, warble fly, or botfly.
1.1. An annoying person, especially one who provokes others into action by criticism.

The "annoying person" part of this definition is obviously bothersome for all concerned. I visited Hunsader and his sidekick in Winnetka, Ill., for a profile in 2013 and can confirm they aren't actually annoying in person but are a pretty jovial and affable lot. Still, Hunsader has been biting the rumps of sacred cows in the trading, regulatory -- and, yes, finance journalism -- communities for years, and it's obviously going to be pretty annoying if you're the owner of one of those rumps. (Full disclosure when it comes to being annoying: Some of his followers were annoyed that I pointed out his firm is situated in a small office above a beauty salon offering a manicure/pedicure combo for $45, but price discovery is important to Bloomberg readers.)

Anyway, it's the "provokes others into action by criticism" part of the definition that is important, and this award from the SEC -- one of the most frequent targets of his criticism -- proves that he's accomplished just that. The award stems from a $5 million fine levied against the New York Stock Exchange for "improperly sending market data to proprietary customers before sending that data to be included in what are known as consolidated feeds, which broadly distribute trade and quote data to the public."

This is right in Hunsader's wheelhouse because his firm operates a "ticker plant" that processes market data and he's developed a cult following for his suitable-for-framing charts. The award certainly gives him a chance to thumb his nose at his many critics in the trading world who have questioned his conclusions for years.

This SEC award shows that it would be foolish to completely write off Hunsader's musicianship as a whistle-blower, as some critics would like.

Regardless of your opinion of Hunsader, you have to agree that he's planning to put the money to good use: “I have four daughters! It’s going towards college tuition, of course,” he told MarketWatch.

So congratulations, Eric. Now mani/pedis for everyone!

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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    Michael P. Regan in New York at

    To contact the editor responsible for this story:
    Daniel Niemi at

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