Not Insider Trading? Part I

See if you can figure this one out: if you are extremely rich and influential, then you can receive market news before the general public, and legally trade on it. What?! The service provided to these traders, known as "flashing," allows them to view orders submitted to exchanges, like the Nasdaq, before they are actually placed on the open market. The time period to review the information before the trade is placed is very short, fractions of a second, but enough time for an automated computer trading program to respond.

 

Somehow the SEC has not, as of yet, considered this insider trading, even though this is privileged information being used to make a profit. Senator Charles Schumer (D-NY) promises to take action if the SEC does not. He vows that he will introduce to Congress legislation to ban the practice if the SEC delays.

 

Source: CNBC

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