In August 2009, then Senator Ted Kaufman wrote SEC Chairman Mary Schapiro to urge her to study quickly how dramatic changes in our stock markets had in only a few years time led to an explosive growth in computerized trading. THE PAYOFF: Why Wall Street Always Wins, written by Jeff Connaughton (Kaufman’s chief of staff), tells how the letter triggered an “air wing” of Wall Street executives to fly to Washington and lobby Congress and the SEC.
Ted’s letter to Chairman Schapiro helped draw the media’s attention to dark pools and HFT, which began to receive extensive (and concerned) coverage in the financial press. The letter also transformed Ted from a virtually unknown Senate newcomer into a brightly flashing blip on Wall Street’s radar screen. In response, Wall Street scrambled an entire air wing of bankers and lobbyists to buzz Capitol Hill. Soon, squadrons were swooping into our office, anxious to thwart new regu- lations following the financial crisis and, particularly, to prevent a crackdown on HFT. They were numerous (we typically met with five high-level Wall Street executives at a time) and unanimous. Whether a megabank, broker-dealer, or a hedge fund, they all said they believed that the stock market had never functioned better.