Weil on Finance: High-Speed Trader Was Too Slow
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Virtu Financial is delaying its IPO.
Imagine that. A high-speed trader was too slow to get ahead of Michael Lewis's publication schedule. So amid the outcry unleashed by "Flash Boys," the company is delaying its initial public offering by a few weeks. Not that you would want to buy shares in this company if you're one of those investors who cares about things like whether you can believe the numbers. Recall that Virtu in its registration statement noted its "inability to prepare accurate financial statements."
The FBI doesn't understand high-frequency trading , but it's willing to learn.
Because if it doesn't, then it won't be able to help the Michael Lewis book tour much more than it already has. First the bureau responded to Lewis's ``60 Minutes'' interview a few days ago by dialing up reporters to tell them it already had opened an investigation. Now "federal agents are making an unusual public plea for the financial industry to bare its secrets," and the "Federal Bureau of Investigation has openly solicited traders and stock-exchange workers to blow the whistle on possible front-running and manipulation via high-speed computers." So the same FBI that couldn't find any big shots to nail after the financial crisis is now going to try its hand at algorithms? Best of luck.
Steven Sears of Barron's reports: "The new Michael Lewis book, Flash Boys, focuses on high-frequency trading, which, Lewis contends, amounts to high-tech front running. Unusual action in the options market late last week suggests a bit of trading ahead of the 60 Minutes segment that effectively launched Lewis' book." It seems there was some unusually heavy trading in bearish options on Nasdaq OMX's stock. "Some investors bought about 6,000 puts in anticipation the stock would decline. Trade Alert, an options analytical service, said the volume was five-times greater than normal trading volume. The trading seemed to make little sense -- until Monday's announcement that the Federal Bureau of Investigation was investigating high-frequency trading." And that's where the Barron's story lost me, because actually the trading made all the sense in the world. CBS News was doing promos late last week for its ``60 Minutes'' segment with Lewis, including a news release on the morning of March 28 during regular trading hours. And it isn't as if the contents of his book would qualify as inside information. Some people are better than other people at figuring things out.
JPMorgan Chase just can't win .
Only a few months ago, JPMorgan got slapped by the Justice Department for violations of anti-money laundering laws related to its servicing of Ponzi schemer Bernard Madoff's accounts. So now that the bank is supposed to be on its best behavior again, it blocked a payment from a Russian embassy to an insurance company owned by Bank Rossiya, which the U.S. recently added to its sanctions list. This has Russia's government all upset at JPMorgan. It called JPMorgan's move "a hostile act against Russian diplomatic missions" and a violation of international law. And hopefully this doesn't eventually lead to a nuclear standoff or, worse, a reduction in size of the JPMorgan bonus pool. But at least this alleged infraction won't violate the terms of JPMorgan's deferred-prosecution agreement with Justice.
The PricewaterhouseCoopers partners who designed Caterpillar's Swiss tax dodge said some funny stuff that they probably regret.
Going Concern has an excellent roundup of their old e-mails, released yesterday as part of a Senate investigative hearing. My personal favorite: "Baby boomers have their fun, and leave it to the kids to pay for it."
Trey Parker and Matt Stone should make this into an episode of South Park .
Here's the headline: "Colorado Town Considers Letting Residents Shoot at Drones."
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Jonathan Weil at firstname.lastname@example.org
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