The city of Providence, RI, USA\u00a0claims Bank of America and the New York Stock Exchange among others rigged securities markets to divert billions of dollars from buyers and sellers of shares to themselves.<\/p>\n
One defendant in today\u2019s complaint, Virtu Financial Inc., a high-frequency trader that delayed its initial public offering, has received inquiries from the office of New York\u2019s attorney general, Eric Schneiderman, according to a person familiar with the matter. Schneiderman announced last month that he\u2019s investigating high-frequency traders.<\/p>\n
Last month, U.S. Attorney General Eric Holder promised Congress a full investigation into whether high-frequency traders violated laws against trading on inside information. The FBI\u00a0has said it\u2019s looking into whether firms that engage in high-speed trades get an improper jump on other investors by using information about their trading to make profits.<\/p>\n
Providence claims the exchanges, the biggest brokerage firms and a group of high-speed trading firms allowed some traders to gain access to non-public data about investors\u2019 trades. The scheme allegedly included electronic front-running, in which high-frequency traders learned of bids and offers, made transactions at better prices and then profited from the investors that made the original orders.<\/p>\n
Providence named as defendants 14 brokerages, 16 securities exchanges and 12 high-speed traders. \u00a0\u201cPublic investors are entitled to be treated fairly and honestly by brokers and exchanges,\u201d Providence said in its complaint. \u201cIn addition to destroying trust in the U.S. capital markets, the misconduct alleged herein has siphoned off billions of dollars from private and public pension funds and individual retirement accounts that millions of Americans depend on.\u201d<\/p>\n
The Case: \u00a0City of Providence, Rhode Island v. Bats Global Markets Inc., 14-cv-02811, U.S. District Court, Southern District of New York (Manhattan).<\/p>\n
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