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Justice Dept Probing High-Speed Trading for Insider Trading

/ Source: Associated Press
Attorney General Eric Holder says the Justice Department is probing high-frequency trading to see if it violates insider trading laws.
Attorney General Eric Holder says the Justice Department is probing high-frequency trading to see if it violates insider trading laws.J. Scott Applewhite / AP

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The Department of Justice is investigating high-frequency stock trading to see if any of the practices violate insider trading laws, U.S. Attorney General Eric Holder said Friday.

Brokerage firms use high-frequency trading to get a jump on their competitors. Powerful computers analyze market information and then execute buy and sell orders for stocks within a fraction of a second.

"The Department is committed to ensuring the integrity of our financial markets - and we are determined to follow this investigation wherever the facts and the law may lead," Holder told a House hearing in prepared remarks.

Attorney General Eric Holder says the Justice Department is probing high-frequency trading to see if it violates insider trading laws.
Attorney General Eric Holder says the Justice Department is probing high-frequency trading to see if it violates insider trading laws.J. Scott Applewhite / AP

The practice has come under increasing scrutiny in recent months. The FBI confirmed this week that it has been investigating high-frequency trading firms for about a year. The Wall Street Journal reported Tuesday that investigators were examining the practice of placing a group of trades and then canceling them to create the false appearance of market activity.

New York Attorney General Eric Schneiderman has also campaigned against high-frequency stock trading, saying it gives firms an unfair advantage and erodes public confidence in the stock market.

The practice was the topic of a heated debate on CNBC earlier this week, pitting two market professionals against each other over whether high-frequency trading "rigs" the markets.

-- The Associated Press

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