Attorney General Eric Holder told the House Appropriations Committee today that the DOJ is now investigating high-speed trading practices to determine whether they violate insider-trading laws. The news follows investigations already underway by New York Attorney General Eric Schneiderman, the Commodity Futures Trading Commission and the Securities and Exchange Commission. However since the SEC is a self-regulatory body paid for by the financial industry itself (see: In Bed with Wall Street and my recent interview with author Larry Doyle here for more) and since employees of the SEC have been moving directly into lucrative paying jobs with HFT firms the past few years, there should be no surprise that the SEC has found no issues to date.
In yet another educational discussion, Michael Lewis talks to Reuters about Wall Street’s highly charged response to his book about high-frequency trading and rigged markets. Here is a direct video link.
All of which reminds me of the following quote from a defeated Herbert Hoover as he left office in 1934, 5 years after the financial crash of 1929 had brought the country to its knees. From 1929 to 1934 the bankers continued largely unscathed by prosecution or reform. It was not until the Pecora Commission brought industry practices to the attention of mainstream America that the politicians were shamed into effecting meaningful reforms that finally broke up the conflicts of interest which had formed the lucrative life blood of the banking cartel. Yes we can do it again.
“The Federal Reserve and I have tried everything on behalf of the bankers but they have fought us, haven’t tried to cooperate, haven’t even told us the truth. They are without ability and without character.” — Departing US President Herbert Hoover, March 1933 (1874–1964)