FINRA acts to stem High-Frequency trading abuses

Posted On: January 6, 2011 by Law Offices of Ralph Behr

FINRA chairman Richard Ketchum has acted decisively to increase supervision of and enforcement because of recent complaints about Hedge funds activity in high-frequency trading venues. In a recent case FINRA censured and fined Trillium one million dollars and suspended eleven employees in connection with “illicit high-frequency” trading strategies. Calling these matters “troubling” FINRA has begun to act to reassure investors that inside traders cannot skim markets or drive markets improperly. The complaint arises from the widely perceived but much denied advantage afforded to high-frequency computer driven trades. Although South Florida has not had any cases in 2010 arising from Fort Lauderdale or Miami on this issue, South Florida stockbrokers are aware that the trading activity diminished investor perception of a level playing field for all investors.
FINRA accused Trillium of manipulating of stock and equity prices by creating and executing orders that were not true trades but had the effect of increased activity and volume liquidity which has the effect of accelerating price changes. The device will draw investors to securities because of exceptionally high trading volume. Fort Lauderdale and Boca Raton stockbrokers and their wire houses monitor markets for out-of-the ordinary trading volumes: once identified as active trading stocks many investors will be drawn into taking positions, either short or long, thus creating volume driven price changes. The high-frequency computer driven traders then skim small gains from volume driven stocks and by that device generate profits from their questionable devices. Many South Florida stockbroker fraud attorneys are aware and seeking clients to file FINRA complaints. If you believe a stock you are trading has seen unusual trading activity you should address those concerns with your Financial Advisor and possibly seek a consultation with a South Florida stockbroker fraud attorney.