FBI investigates high-speed stock traders

NEW YORK — The FBI is looking into the practices of high-frequency stock trading firms, adding to the scrutiny that is being placed on the practice.

Brokerage firms use high-frequency trading to get a jump on their competitors. Powerful computers analyze market information and then execute buy and sell orders for stocks within a fraction of a second.

One way that high-frequency traders have gained an edge is by receiving market-moving information, such as corporate earnings releases, before other traders and investors. They then exploit that advantage by placing buy or sell orders before other investors.

Until recently, the firms have been able to access crucial financial information by subscribing directly to companies that publish corporate reports, rather than accessing it through financial news wires such as ThomsonReuters, Dow Jones and Bloomberg.

That particular practice has come under increasing scrutiny in recent months, though. New York Attorney General Eric Schneiderman says high-frequency trading gives firms an unfair advantage and erodes public confidence in the stock market.

Business Wire, a company that distributes corporate earnings and other news releases, in February said it would stop providing its service directly to high-frequency trading firms. Even though the direct distribution of its electronic feeds to a “handful” of trading firms was not illegal, the company said it was concerned about its reputation.

The move was followed last month by Marketwired, a company which provides a similar service.

The FBI has been investigating high-frequency trading for about a year, according to a person familiar with the matter, who spoke on condition of anonymity. The Wall Street Journal reported Tuesday that investigators were examining the practice of placing a group of trades and then canceling them to create the false appearance of market activity.

More in Herald Business Journal

Voters are on the sidelines as the port fills a vacant seat

Troy McClelland resigned from the Port of Everett commission too late for an election before 2019.

In space capsules today, little room but big improvement

Boeing and SpaceX are relying on a tried-and-true design as they each develop new spacecraft.

First Boeing KC-46 delivery to Air Force slides into 2018

Certification milestones have been missed, and problems have emerged in flight test, a source says.

SEC reveals hack, possibility info was used for trading

The regulatory agency said the hack was discovered last year.

Newest must-try eatery: 85°C Bakery Cafe in Lynnwood

The popular bakery, part of a Taiwan-based chain, is already drawing out-the-door crowds.

Snohomish County tax liens

Tax liens are gathered from online public records filed with the Snohomish… Continue reading

Trudeau: Canada could stop dealing with Boeing over dispute

Boeing had petitioned the U.S. to investigate government subsidies of Bombardier’s CSeries aircraft.

Toys ‘R’ Us files for bankruptcy but keeps stores open

Retailers of all kinds are struggling. Toys ‘R’ Us is among at least 18 other bankruptcies this year.

Marysville-Arlington fiber-optic link planned by Comcast

The high-speed internet line, to be ready next year, is seen as a boost for business development.

Most Read