>>6617934 lb U.S. exchanges must face renewed high-frequency trading claims: judge
Whistleblower award for NYSE fine goes to HFT critic
Eric Hunsader gets payout from the SEC
Eric Hunsader, a vocal critic of high-frequency traders, said the Securities and Exchange Commission is sending him a $750,000 whistleblower award.
On Jan. 15 the SEC confirmed it would pay “more than $700,000” to a whistleblower that had provided the “independent analysis as well as independent knowledge of securities law violations” that led to a $5 million fine for the New York Stock Exchange in 2012. Hunsader showed MarketWatch a letter from the SEC that confirmed the approval of his award and told MarketWatch he was the recipient of a pending award for the tip that led to the NYSE fine. By law, the SEC does not publicly identify the whistleblower’s name or the company that was subject to the order. The notice to Hunsader on Monday also said the time period for all other potential claimants to appeal the SEC decision on the same issue had expired.
A spokeswoman from the SEC declined comment on the whistleblower award.
The SEC fined the NYSE and its parent NYSE Euronext, a subsidiary of Intercontinental Exchange ICE, -0.09% , in 2012 for violating Regulation NMS over an extended period of time beginning in 2008. The NYSE sent trade prices and details through two of its proprietary feeds before sending that data to the consolidated feeds that provide trade and quote data to the public, according to the SEC.
This is the first whistleblower award by the SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to reward an independent third party for analysis of a potential securities law violation, a model prompted by the experience of an unsuccessful outsider, Madoff whistleblower Harry Markopolos.
Hunsader said his firm, Nanex, originally discovered the issue on the day of the flash crash, May 6, 2010.
Referring to the SEC’s current market data analyzing tool, Midas, Hunsader said it would be unlikely that the agency would be able to spot the issue again using it.
“You could do it with Midas but not out of the box. You would really have to know what you’re doing. So, I would say no, they can’t do what we did,” he said.
Hunsader noted he gave the information to the SEC and published it on his site before a whistleblower award rule was even in effect.
“The office wasn’t even set up but the Dodd-Frank law passed the day before. I gave it to them on July 22 and the whistleblower office opened up a year later,” he said.
He also said he told the NYSE directly, but they told him he was not a member.
A spokeswoman from the New York Stock Exchange declined to comment on whether Hunsader brought the issue to them first.
Hunsader had some advice to would-be whistleblowers, especially other outsiders trying to tell regulators about an issue based on their own original analysis.
“It doesn’t matter if an algorithm is ripping off the market, for example, you have to prove intent. You better be absolutely sure you can prove intent. The SEC had a good piece of evidence to go confidently to the NYSE ,” said Hunsader. “You could not refute it. It only took three charts. I told them, ‘There’s nothing more you need from me.’”
Hunsader said he thinks his information was taken seriously by the regulator because of an introduction from another regulator.
Hunsader also praised Mark Donohue, who was the assistant director in the SEC’s Office of Compliance Inspections and Examinations at the time.
https://www.marketwatch.com/story/whistleblower-award-for-nyse-fine-goes-to-hft-critic-2016-03-01
'''Plese visit this site for many articles from this firm. At the forefront of exposing this practice.
The SEC just did not give a shit. All they had to do was follow-up on the original three charts sent to them. They chose not to.
Some samples at this site
July 14, 2015 : HFT Hot Potato 2 - The Treasury Flash Crash
March 18, 2015 : U.S. Dollar Flash Crash
Oct. 28, 2014 : Record Treasury Futures Trades
http://www.nanex.net/NxResearch/ResearchPage/0/?sort_val=date
http://www.nanex.net/NxResearch/ResearchPage/0/?sort_val=date