Mary Jo White may not think that high-frequency trading constitutes “unlawful insider-trading.” But New York Attorney General Eric Schneiderman is wondering whether it mightn’t be Insider Trading 2.0®.
Attorney General Eric Schneiderman's office is expected to send subpoenas within days to exchanges, one of the sources said on Thursday. The subpoenas will likely focus on how high frequency traders may receive information before other market participants.
Another source said major banks that operate dark pools, or platforms where trades take place out of sight of the rest of the market, have been sent letters asking for information….
NYSE, a unit of ICE, has already been cooperating with the attorney general by sharing data, while BATS has also had conversations with the prosecutor, two of the sources said. Nasdaq Chief Executive Robert Greifeld said in an interview on April 24 that his company had not been subpoenaed….
Schneiderman has been looking into what he considers unfair Wall Street practices for about a year and has spoken out against issues such as exchanges allowing high-frequency trading firms to "co-locate" their computers within the exchanges' data centers so that trading information reaches them faster than others….
One of the sources said the earlier subpoenas requested information about business operations, including their strategies, the technology they use, and any communications - such as e-mails, writings, notes, text messages and even social media posts - the firms had with the exchanges.
The information requested is so broad that some of the firms have asked that the scope be narrowed, the source added.