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Whistleblower Revealed

Posted on March 1, 2016 by Doug Cornelius
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Several weeks ago the Securities and Exchange Commission handed out a big whistleblower award to an industry expert who lacked the first person knowledge of wrongdoing. That whistleblower has been revealed.

Close-up Of Metal Sport Whistle On American Flag

The SEC itself has a strict rule on disclosing the identity of whistleblowers. Eric Hunsader said the Securities and Exchange Commission is sending him a $750,000 whistleblower award according to Francine McKenna of Marketwatch.

The SEC fined the New York Stock Exchange and its parent NYSE Euronext in 2012 for violating Regulation NMS. The NYSE sent data through two of its proprietary feeds before sending that data to the consolidated feeds, according to the SEC.

Hunsader said his firm, Nanex, originally discovered the issue on the day of the flash crash, May 6, 2010: Analysis of the “Flash Crash”.

With high-frequency trading small delays in quotes can lead to dramatic changes in trading. The NYSE data feed was delayed because of the diversion, resulting in the quotes being time-stamped improperly. This inaccuracy in data lead to a flood of short-selling causing prices to drop dramatically.

Sources:

  • Whistleblower award for NYSE fine goes to HFT critic By Francine McKenna in MarketWatch
  • Congratulations To Prominent Anti-HFT Critic Eric Hunsader For Winning $750,000 Whistleblower Award by Tyler Durden in ZeroHedge
  • How HFT Quote Stuffing Caused The Market Crash Of May 6, And Threatens To Destroy The Entire Market At Any Moment
  • SEC Charges New York Stock Exchange for Improper Distribution of Market Data
  • Could Whistleblowing Be The New Short-Selling?

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