Steve Kroft reports on a new book from Michael Lewis that reveals how some high-speed traders work the stock market to their advantage

Is the U.S. stock market rigged?

Lewis explains how the stock market is rigged

Author Michael Lewis explains why vast sums of money are being spent by high frequency traders to gain microseconds in speed

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Lewis: Investors, big and small, are “prey”

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How ordinary investors are getting “screwed”

March 30, 2014, 6:20 PM|Author Michael Lewis explains how high frequency traders have created instability in the market

Category: Really, really bad calls, Regulation, Trading, Video

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12 Responses to “60 Minutes: Is the U.S. stock market rigged?”

  1. rd says:

    Of course it is rigged against you want to do short-term trading. There is a reason the pros have big buildings in expensive real estate and you don’t. In the end, our big advantage is that we are investing for a lifetime, instead of quarterly reports, so if you don’t buy into the financial sectors marketing hype, low fee and low turnover investments means we are playing on a different field from the HFT group.

    However, the rigging the average person really needs to watch out for is this:

    http://www.investmentnews.com/article/20140325/FREE/140329949#

    The Supremes may end up deciding if the financial firms will be legally allowed to screw you in your 401ks. Based on the record of this court, my guess is that the Roberts Court would announce that the Law of the Jungle is what rules in the US and that corporations are allowed to over-charge employees at will.

  2. Seaton says:

    Great report. Fun clips to watch. BUT! Will there be any change from, “Legalized front-running”? Can’t imagine there will be, what with our feckless SEC only randomly & occassionally pursuing such incidents. Congressman will bring up legislation and successfully get it voted upon and out the door of the House, & Senate will pass it? Really?
    I’ve seen & had evidence of illegal front-running, and couldn’t find an attorney I could afford to pursue a case, let alone the SEC. It’s the cost of doing business anymore. Traders will always try to “get-ahead”, and long-term investors merely pay the extra expense of participating in the markets. At least trades are $9.95 now, not hundreds of dollars like in the old days, wasn’t it “1/4 point for oddlots, 1/8th point for round lots”?

  3. Herman Frank says:

    Astonishing tidbit of information: “By skimming the tiniest fractions off the margins nobody “notices outright”, but all those tiny kernels of sand create a beach of a profit – per day – for the flash-traders!” In the mean time it is known that the fastest tech buys you the biggest profit. Not because they are trading “better”; no, “because they are fronting the other deals”.

    Will it help me to ask my broker to course my trades through IEX? It seems like the answer is in the documentary already “No, they prefer to collaborate in skimming my trades.”

    Will they get away with it? Also there the answer is provided by history: “In the last 5 years, how many bankers were convicted of criminal activity?”

  4. wood1024 says:

    The biggest rigging are the perverse incentives of the monetary system, aka, the FED’s QE and ZIRP policies, and the fiscal system, aka, the tax policy and “unfunded” entitlement(s) policy. Scalping fractions of cents isn’t good, but what about the obvious “elephant(s) in the room?” Maybe CBS and 60 Minutes should investigate those too, don’t you think?

    • DeDude says:

      Yeah don’t look here – look over there!!!
      I am not a crook – cause that other guy is a bigger crook!!!

  5. JEHR says:

    It is interesting to note how quickly Goldman can change its uniform from HFT to obeying the rules. That is what distinguishes GS from other banks.

  6. jlj says:

    BR; a factual question for you.Is it true that front running is also legal in the currency markets>Or more generally is front running legal in other markets also?

    • DeDude says:

      Even more important is there any markets or exchanges where front running is not legal as long as the exchange get its cut of the loot? Didn’t London put a tax on stock sales and has that at least cut down on this scam? If that is the case, how can people trade on the London exchanges?

  7. CD4P says:

    Saw it. How hard can it be to identify the middle man’s trade only exists because he sees what the originator’s order is and just happens to match it’s size, over and over? SEC &/or Justice Dept., where are you???

  8. WickedGreen says:

    Like a lot of things in this carny barker media age, the reaction is much more telling than the accusation is shocking.

  9. icantdance says:

    thank you micheal lewis!

    I wonder about what networking innovations HFT has bankrolled?

    einhorn looks like he is on the starting block and just listening for the gun.

  10. V says:

    If the SEC/FBI won’t investigate in a timely manner, the simplest solution would be to publish detailed maps of where the cables are.

    Whoops.