Courtesy of Pam Martens.
Since the launch of the new Michael Lewis book, “Flash Boys,” at the end of March with wall to wall media coverage, including his pronouncement on 60 Minutes that the stock market is rigged against average investors, there has been a whirlwind of damage control.
The FBI announced that an investigation was already in the works, the New York State Attorney General is issuing subpoenas and a civil war (frequently not so civil) has broken out among industry titans staking out their media turf on whether the market is or is not rigged by high frequency traders. Not in dispute is the fact that these high frequency traders have armed themselves with superfast computers, algorithms and artificial intelligence programs, all of which the New York Stock Exchange and NASDAQ have obligingly allowed – for annual fees running into tens of thousands of dollars – to co-locate next to the exchange’s own computers so the high speed traders can jump in front of the less tech savvy traders and steal pennies from millions of trades each and every day – a loss of billions of dollars to pensions and ordinary investors each year.
Proposals for leveling the playing field for institutional investors and large traders have been publicized, but what about the small investor? What would it take to convince the average American investor that they can safely buy 20 shares, or 50 shares or 100 shares in a solid American company on a U.S.-based stock exchange without getting fleeced?
James Kidney, the former SEC attorney who caused a stir this month when it was revealed that he had criticized management at the SEC for policing “the broken windows on the street level” while ignoring the “penthouse floors” in a speech at his retirement party after more than two decades at the Federal agency, has a thought-provoking idea presented below.
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Asking Capitalism to Cure Capitalist Woes:
The US Exchange, a Market for the Rest of Us
By James A. Kidney
James A. Kidney, Former SEC Trial Attorney
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