A "law" that allows you a merely pay a fine isn't a law, its a revenue-generating procedure.
Murder is illegal. You can't pay $500,000 to the authorities and then go on about your business.
For a law to have any weight, you have to be inconvenienced regardless of your financial status.
This is not a logical sentence. They are obviously getting fined because it's illegal. The traders involved are also terminated, fyi.
All banks are required to submit automated reports on Front Running detection algorithms daily to the regulators. Every trade is evaluated by the compliance systems.
If you think the fines are not big enough or that the algorithms are missing things, then make that more logical argument.
Stay away from hyperbole because it discredits you.
With crimes like these, it is nearly definitional.
It is trivial to put a price on the value of an action like this; if the fine for the action is less than it grosses, it is just a tax.
And not just the actions regulators catch, but the others too.
do { new Crimes() } while ( fine(Crimes.detected) < profit(Crimes.all) )It's illegal by definition. But since they can pay a fine for a net gain, you can say that they legally profit from doing something illegal.
Obviously. Do you think the SEC is full of morons?
The $3 billion in fines Wells Fargo paid versus the multiple billions it made from 2002-2015. The bank has almost $2 trillion in assets as of 2020.
> Do you think the SEC is full of morons?
No, worse. Cowards. Entirely too many see the SEC as a pathway to a high-paying job on Wall Street. You learn the ins and outs of compliance and go from a GS-8 - GS-13 making $70,000 - $150,000 a year, to making $1 million a year helping these banks, hedge funds, and other investors sidestep regulations by the most narrow of line-toeing.
This had ZERO to do with Front Running.
The whole thing is rigged.
Front Running is when you receive an order from a large client and you yourself trade in the same stock before them, and then sell the stock to them, or allow the spread to narrow and pocket the difference.
High frequency trading is not front running unless it illegally takes data from the client trading desk - which would be both obvious and highly illegal.
It's only referred that may by people who have no idea what they're talking about.
Front running isn't about "beating" anyone to anything. It's about stealing non-public information about an actor's intent to trade and using it to make trades before that information becomes public, and specifically before that trade executes. It's the theft bit which is the reason it's illegal.
What HFT firms are doing is simply rushing to execute as fast as possible on generally available information. They're not acting on information that's not legally available to everyone else, because that would be illegal misuse of that information. This sort of thing is pretty easy to detect, and the SEC comes down pretty hard on it.
High Frequency trading is actually GOOD for retail investors because it reduces spreads and increases liquidity.