GOOD NEWS: FBI Targets Market Flash Front Runners

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FBI investigating high-speed trading outfits


U.S. federal agents are investigating whether high-speed trading companies violate U.S. laws by using fast-moving market information not available to other traders, a FBI spokesman confirmed on Monday. 

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Launched by the Federal Bureau of Investigation about a year ago, the investigation called the High-Speed Trading Initiative, is still in its primary stages, a senior FBI official and an agency spokesman told The Wall Street Journal, which first reported the story.

The spokesman who spoke to the Journal said high-speed trading based on information about orders that other investors do not have access to and hence putting them at a disadvantage could violate insider-trading laws. 

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Separately, an FBI spokesman, who did not want to be identified by name, told Reuters the agency was probing high-frequency traders front-running others' trades by getting to exchanges first, among other areas. 

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The spokesman said a big trade, such as bank shorting a million shares of a company under investigation, could be considered a material event.

The FBI has deployed a large number of agents, looking at proprietary-trading outfits as well as fast-trading operations at brokers who buy and sell orders on behalf of clients, such as mutual funds and pension plans, the Journal said. 


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