WASHINGTON, April 29 (UPI) -- In a hearing ostensibly meant to hash out the Securities and Exchange Commission's budget request for the next fiscal year, congressmen from both sides of the aisle fretted over renewed fears that high-frequency trading was rigging the stock market and the SEC hasn't done enough to re-level the playing field.
SEC Chariman Mary Jo White attempted to tamp down a those fears, reignited by the publication last month of Michael Lewis' Flash Boys: A Wall Street Revolt, by promising that she was placing the highest priority in investigating the practice.
"We have taken a data-driven, disciplined approach to addressing complex market structure issues," White said in her statement before the House Financial Services committee Tuesday.
“The markets are not rigged," she said. "The U.S. markets are the strongest and most reliable in the world."
Lewis alleges high-frequency trading, through which firms can pay to subscribe to superfast data feeds that allow them to slip in to purchase and resell a stock in the fractions of a second between a smaller investor indicating a desire to buy and the time the sale goes through, unfairly pushes up the price and looks too much like insider trading.
“I know people now who don’t want to trade in the markets” because of concerns about high-frequency trading, said Rep. Carolyn Maloney, D-N.Y.
In addition to the SEC, which has said high-frequency trading does not amount to insider-trading, the FBI, the U.S. Attorney General, and state prosecutors in New York have all launched investigations into the practice, which makes up half the volume of trades.
And among the committee's members, concerns over fairness go beyond legality.
"In my opinion, the SEC's most important function is providing confidence for investors in the general public," said Rep. Capuano, D-Mass., accusing White of dragging her feet on its investigation. "The seeming constant erosion of confidence in the SEC to actually do the job, the main job, that it's required to do."
"If we don't believe it," he said, "you may as well not exist."