When an industry gets bad press and notices the clouds of regulation and oversight forming on the horizon, they buckle down and get to work.
Do they rein in their practices, oust bad actors and call for renewed eithics? Not these days. Instead, the going gets tough, the toughs hire lobbyists.
In the weeks that followed the explosive release of Michael Lewis’ “Flash Boys,” the blockbuster that warned average Americans that the stock markets were rigged — and thus confirming why they are staying out of the stock markets these days — we have seen K Street warriors rise to the defence of the beleagured HFT industry.
“We’re not lobbyists,” one representatives from a HFT advocacy firm told me tjhis spring despite having offices in Washington DC and with managers from the former presidential campaigns of Barack Obama and Mitt Romney. “We’re here to educate.”
Ah, educate. Those high speed trades only impact other high worth investors. HFTs add much needed liquidity to a dry and boring market. We’re just using technology the way investors always have.
And so forth. Of course, the people they’re trying to educate are members of Congress and the media, who continue to look at high-speed trading with suspicion. There is money to defend money, it seems. As Bloomberg reports, even former regulators are now crossing the aisles to defend the practices and participants that they were once charged to investigate and oversee:
Former U.S. Commodity Futures Trading Commission member Bart Chilton, an outspoken critic of some high-speed trading practices while at the agency, was enlisted in a Washington- based effort to improve the image of an industry beset by regulatory and legislative scrutiny.
The Modern Markets Initiative, organized by four firms last year, hired former Bank of America Corp. and Nasdaq OMX Group Inc. executive Bill Harts to lead its efforts, the group said in a statement yesterday. Chilton, now a senior adviser at law firm DLA Piper LLP, was hired to advise on regulatory and public policy, according to the statement.
We don’t begrudge anyone making money — this is America after all — but the idea that lobbying senators and congress men is more effective than reining in an industry’s practices is more than a bit cynical. If you want to be seen to be playing within the rules, perhaps you should follow them without working the refs.
