FBI Teams Up With SEC to Tackle Market Manipulation

thenews 2013.03.19 17:12

Tuesday, the Financial Times reported that the FBI has joined the SEC in a probe of computer trading to prevent market manipulation caused by electronic trading strategies. They’re specifically going after algorithmic trading and high-frequency trading (HFT) strategies. The effort falls under the SEC’s new Quantitative Analytics Unit, which has been examining abuses related to HFT and dark pools.

Apparently, the team will look specifically at hedge funds and proprietary trading firms. From the FT article, I get the impression that they’ll be looking only at the equities markets.

Can the FBI Catch These Guys?

My immediate reaction to the article was to wonder how on earth the FBI would catch market manipulators if the SEC — which at least has more exposure to electronic trading — can’t figure it out. If the “expert” regulator can’t keep up with what these high-speed firms are doing, how can the FBI offer much assistance? I’m assuming that there are not a bunch of quantitative analysts suddenly moving from the hedge fund world into law enforcement.