The arrest yesterday of one lone HFT guy in Britain underlines just how farcical the rigged casino, formerly known as public markets has become. Perfect for show of crack down, without any industry bite, Mr. Sarao is a safe target for the finance controlled regulators and prosecutors since he was not working for any of the big HFT firms who are making off with billions in this area every week.
The spectacle reminds of Sergey Aleynikov, the ‘rogue’ trader who was prosecuted in 2010 not for improper trading via HFT, but rather because he allegedly stole code for doing so from his employer Goldman Sachs. For this latter outrage he spent 97 months in prison before his conviction was overturned and entered as an acquittal by the United States Court of Appeals for the Second Circuit on February 2012.
This whole theater is a farcical show to bait and switch the public eye away from the fact that HFT manipulation has become the dominant force driving public markets today. Lest we forget how corrupt and self-serving actors have become, just last week, none other than former Fed head, Ben Bernanke himself accepted a sweet consulting gig for Citadel-one of the world’s largest and most profitable HFT firms–with nary so much as a blush or embarrassed look. Or that Bart Chilton, the Commodity Futures Trading Commission head that was supposed to be watching for illegal activity in futures markets from 2007 to 2014, took a plum spot himself last April as “Advisor” with DLA Piper, one of the largest HFT lobby firms in the world.
The reality is that there are thousands of traders working for large firms and TBTF banks every single day, who are doing all manner of spoof type false/skimming/frontrunning orders that are deleted before they can be completed. There is no defense or legitimate function for allowing these forces to rape public markets as their own personal profit playground. Their activities put all legitimate participants and functions for capital markets in support of the economy and savings, at extreme risk in the process.
Several people who are not on the take, have been providing daily evidence of all these abuses to regulators for years with no response. Nanex founder Eric Scott Hunsader has been just one of the leading horn blowers in all of this, you can follow his daily twitter on these topics here. The evidence is massive and incontrovertible, and yet also intentionally ignored by captured law makers and prosecutors to date.
Just how dumb do they think the public are? Very dumb indeed; and so far they have been right. The public are perfect patsies.
Themis Trading Partner Joe Saluzzi discussed many of these facts on Bloomberg in the following two segments yesterday. Here is a direct video link.
Navinder Singh Sarao, 36, appeared in London court the day after his arrest by British police after being charged in Chicago with 22 criminal counts including fraud and market manipulation. Themis Trading Partner Joe Saluzzi explains why the selection of only Sarao for prosecution in this is an outrage. Here is a direct video link.
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