FINRA Enforcement Chief Brad Bennett on HFT, “Better To Be Silent and Thought a Fool . . .”
Posted by Larry Doyle on April 28, 2014 9:27 AM |
In today’s version of “You Can’t Make This Stuff Up,” we hear from Brad Bennett, the Head of Enforcement at Wall Street’s self-regulatory organization FINRA. Bennett and others spoke on a panel this past Friday at a conference sponsored by the Practicing Law Institute.
On the hot button topic of high frequency trading, Bennett weighed in with a comparison that is so dismissive as to defy credulity. Let’s navigate as the folks at Wealth Management were there to cover and reported:
Benefiting from faster access to the markets is akin to buying a first-class plane ticket, and doesn’t sound unfair, said the top cop at Wall Street regulator FINRA.
Bennett was on a panel with the enforcement heads of the SEC, the Consumer Financial Protection Bureau and the Dept. of Justice.
Bennett specifically had the following to say:
“The interesting thing of what Lewis writes about is his primary focus is on preferential access – the exchanges allowing people to locate closer to their trading engines such that their pipes are faster which (you know), that’s an interesting area of investigation because if fully disclosed, one could look at it like, well, can you buy first class ticket and get a first class seat on the airplane? Do you get off quicker if you buy first class and get drinks, well yes you do. Is there anything unfair about this if it’s fundamentally disclosed? I don’t know, doesn’t sound like it to me but those are the kinds of issues that have to be worked thru.”
Bennett is not some mid-level regulatory official. As the Head of Enforcement, he is charged with making sure Wall Street firms play by the rules to the absolute letter of the law and to mete out punishment when they do not. Given FINRA’s track record (which leads me to define this regulatory organization as little more than a pack of meter maids), perhaps we should not be surprised by Bennett’s rather flippant remark. I guess some might call him the Head Meter Maid.
So, once again, I will pose the question to Mr. Bennett and his FINRA colleagues: are you upholding your mandate to fully protect investors and the public interest or are you protecting the industry that funds you? The comment equating co-location of computers on equity exchanges to a first class plane ticket so as to facilitate what appears to be massive front running puts that question front and center once again.
Bennett references that the practices involved might generate “an interesting area of investigation if fully disclosed.”
Well, Mr. Bennett, let’s do just that.
Will you and your colleagues at FINRA allow for an independent outside audit so that full disclosures on this front and others can bring meaningful transparency to these topics? Will you and your colleagues at FINRA agree to your organization being subject to the Freedom of Information Act?
I will be the first to sing your praises if you open the doors and windows into these areas of national concern.
If not, then I can only view your comparative statement as further evidence confirming that you would be “better to be silent and thought a fool than to speak up and remove all doubt.”
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