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April 8, 2014

High-Frequency Din Rises as Trading Inquiries Evoke Market’s Past Scandals

“Scrutiny of high-frequency trading is stirring memories among investment veterans of earlier scandals when the government targeted price-fixing and fraud in U.S. equity markets.

“Michael Lewis’s book “Flash Boys” and probes by the New York attorney general and Federal Bureau of Investigation are spurring outcry from Washington to Newport Beach, California, as investors and politicians ask if exchanges are rigged. Shares of Nasdaq OMX Group Inc. and IntercontinentalExchange Group Inc. have lost at least 8.8 percent in 2014 after each posted their best annual gains since 2007 and 2006, respectively.

“The pitch rose at the end of last week as Pacific Investment Management Co.’s Bill Gross warned on Bloomberg Radio with Tom Keene that speed traders give the equity market a “negative cast” and investor Mario Gabelli said in a separate interview on Bloomberg Television that it rips off consumers. All the attention reminded 70-year-old hedge fund manager Buzzy Geduld of an earlier era, when allegations of misconduct by Nasdaq traders and New York Stock Exchange floor specialists shook public confidence.”

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Read full Bloomberg article here.

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