The Department of Justice is investigating high-frequency stock trading to see if any of the practices violate insider trading laws, US Attorney General Eric Holder said Friday. Brokerage firms use high-frequency trading to get a jump on their competitors.
Powerful computers analyze market information and then execute buy and sell orders for stocks within a fraction of a second. "The Department is committed to ensuring the integrity of our financial markets–and we are determined to follow this investigation wherever the facts and the law may lead," Holder told a House hearing in prepared remarks. The practice has come under increasing scrutiny in recent months.
The FBI confirmed this week that it has been investigating high-frequency trading firms for about a year. The Wall Street Journal reported Tuesday that investigators were examining the practice of placing a group of trades and then canceling them to create the false appearance of market activity.