Man vs. Machine: Small Investors Lose in Wild West Equity Markets

April 6, 2013 | | NY Post |

Massive fraud in the high-speed trading markets is escaping detection because regulators and exchanges are dithering on a powerful supercomputer to uncover the scams, The Post has learned.

And as retail investors begin dipping their toes back into stocks, now at record prices, the market watchdogs are asleep at the wheel.

“Theft is getting smaller and faster, and has been for years,” one financial investigator told The Post. “Steal a penny a second and you make $864 in a day. When we look at nanosecond trading, it gets better — there are 86.4 trillion nanoseconds in a day.”

But the exchanges, and the Financial Industry Regulatory Authority, are dragging their feet on implementation. Regulators extended the deadline for their CAT blueprints to December.

Investor advocates are furious. “The CAT is years away from realization, given the resources of the SEC under the current budget absurdity. Perhaps just as bad is that the SEC has chosen to outsource much of the effort to the exchanges,” said former Goldman Sachs executive Wallace Turbeville.

“The CAT would shed light on the situation,” added Turbeville, who is now a fellow at Demos, a public policy and research group in New York. “But it does not exist.”