Michael Lewis seems to be getting more mentions than anyone in the financial press and blogs this week. He’s clearly hit a raw nerve with his new book “Flash Boys”.

Here are just a few of the things that have happened since the book was released just two weeks ago at the end of March …

FIRST … The Securities and Exchange Commission (SEC) the financial regulator of Wall Street, the Federal Department of Justice, and the FBI have all announced they have opened separate investigations into High Frequency Trading (HFT) …

Co-incidence or consequence?

SECOND … A lawyer in Chicago has sought leave from the Courts to open a class action against the Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT). (The CME is the world’s biggest centre for trade in market futures, and one of the major players around HFT.) The allegation is that the CME …

… not only permitted the HFTs to see price and market data, including open orders, market orders before all other market participants and traders saw the price and market data, they permitted the HFTs to execute trades using this same non public data and order information before all other traders and market participants. In so doing, the [CME and CBOT] engaged  in a fraud on the marketplace, deceptive practice and failed to maintain a marketplace that is free from market disruption and market manipulation …

Of course the CME has denied they’ve done anything illegal – and they may be proved correct about that by a ponderous and expensive legal process. But the real issue here is: if it is legal (as commentators seem to think), does being legal mean being right? Certainly not, in my view.

Co-incidence or consequence?

THIRD … On 2nd April the S&P 500 broad share index hit it’s all time high of 1897, but in less than 2 weeks since it has dropped to close last week at 1816. That’s a drop of 4.2%: pretty significant really. Have we just seen the top?

Co-incidence or consequence?

FOURTH … Goldman Sachs, a key first major supporter of the IEX exchange set up by the Flash Boys is doing it’s best to look like the good guy. They are quickly winding down their presence in the HFT environment. They are reported also to be winding down their dark pool called Sigma X, one of the biggest of the 45 dark pools operating in secret on the edges of the regulated public markets.

No co-incidence here!

FIFTH … According to the New York Post, the SEC has announced it is considering new regulations of HFT and dark pools, and is already moving to shut down some of the more sinister operators …

The Securities and Exchange Commission is preparing to remove some high-frequency trading firms.

In a purge of computerized markets, prompted by public outrage unleashed by Michael Lewis’ “Flash Boys,” the SEC’s campaign will see numerous enforcement actions, new rules and new business practices — a sweeping overhaul that could benefit the beleaguered New York Stock Exchange, The Post has learned.

Looks like a consequence here!

And SIXTH … lo and behold, the SM Herald is on the case today. They report Australian researchers have “discovered” that market manipulation is rife in the Australian share market. In this case they find that traders have been artificially pushing up the market just at the times that their performance is measured for getting their monthly, quarterly and annual bonus.

Well fancy that!

Give a trader a ridiculous financial incentive to make money for himself and you can guarantee that he’ll do everything (push, pull, collude, whatever it takes) to maximise his bonus. It’s called greed. Not much of a “discovery” really …

And probably not a co-incidence that the research comes to the surface just now.

It’s clearly way past time to call time on the financial “industry” …