Audit Notes: Columbia Navel Gazing

March 27, 2013 | Columbia Journalism Review |

— Speaking of my employer, Demos finds Politico running an op-ed from Columbia Business School professor Charles M. Jones that talks up the benefits of high frequency trading and downplays its pitfalls. Undisclosed: Jones’s paper was funded by Citadel, the giant high frequency trading hedge fund.

Demos’s Wallace Turbeville:

Citadel’s largesse does not mean that Professor Jones’ work was biased. But the very fact that he published an opinion piece in Politico, overtly entering into the political discourse over HFT, is concerning, to say the least. And the Columbia Business School connection can only raise the level of curiosity. Who can forget the image of Professor Jones’ colleague Glenn Hubbard squirming and terminating an interview that questioned his earnings from the financial sector in the film Inside Job?…

Studies that support HFT are praised and contrary studies are dismissed almost derisively. The article concentrates on conventional concepts of market liquidity and the narrow measure of value, transaction costs. Perhaps the support from Citadel was insufficient to fund deeper analysis.

Jones and Politico should have disclosed that funding in the op-ed.