For decades, Wall Street has been a breeding ground for corruption and foul play when dealing with the assets of Americans nationwide, and a recent finding reveals that it has risen to a whole new level. Evidence has surfaced that demonstrates how high frequency traders on Wall Street are exchanging cash for tips on trades that have yet to take place and using the information to act first, rigging the stock market before it moves. High frequency traders have developed computer software that acts on this purchased trade information milliseconds before the rest of the market can react. This slight edge allows high frequency traders to cash in untold fortunes; meanwhile the retirement funds and college savings across America are slowly being drained because those assets are behind the curve and betting against a rigged market.
To understand just how malevolent this practice is, we must first understand one key concept; the stock market doesn’t generate profit, it just moves assets from one place to another. In other words, the stock market is a game of winners and losers.
Every time one of these high frequency traders rigs the market in their favor, someone else is losing. Unfortunately, the losers are always the same. They are made up of everyday, hard-working Americans who don’t have the time or knowledge to manage their own savings, thus leaving it in the hands of the corrupt insiders that don’t play by the rules.
Michael Lewis, a seasoned journalist who focuses much of his work on uncovering the deception on Wall Street, broke this story on high frequency traders and has once again shed light on another widespread practice on Wall Street that is robbing the everyday investor. Perhaps what’s most disturbing, no one is surprised… and no one is doing anything about it.
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There are many reasons why these corrupt practices continue on Wall Street with little-to-no resistance. One of the leading factors, as Michael Lewis points out, is that the SEC, which is supposed to regulate Wall Street, is actually ran by Wall Street. Every year, hundreds of SEC employees leave their posts at the SEC to take higher paying jobs on Wall Street, working as lobbyists and using their behind-the-scenes knowledge to create loopholes that avoid regulation.
In 2011, Retirement Media, Inc. Founder, Phil Cannella, visited the SEC and conducted an exclusive interview with the SEC Inspector General, H. David Kotz. Mr. Cannella addressed the issue of former SEC officials leaving the Commission for the private sector in a move labeled, “The Revolving Door”. EMBED
Wall Street also has a monopoly on the financial news outlets that should be making a bigger deal of these corrupt practices. A recent article by Business Insider shows us that 90% of what we hear and see in the media is controlled by six conglomerate corporations. All of these mammoth corporations have a vested interest in the stock market and if these corporations allowed their reporters to let consumers to see the stock market as the rigged game that it is, they would lose billions.
Although many Americans agree that these flaws exist on Wall Street, most simply don’t care enough to make a change. Here’s why:
Most of us picture Wall Street as a gigantic room with high ceilings, filled with computer screens, flashing numbers, and a sea of suits; something we will likely never personally encounter in our lifetime. We can appreciate the depths of Wall Street’s flaws on a grand scheme, but we’re immediately overwhelmed with a feeling of detachment since it’s not something we see on a personal level. We don’t realize that this corruption reaches far beyond the trading floor of a stock exchange in New York; it appears subtly in the numbers within our retirement plans.
We’ve grown tolerant of seeing red on our statements and chalking it up to poor performance and the ongoing commissions we pay to see it take place. We are too quick to dismiss this phenomenon as “just the way things are.” Subtlety is the cloak that Wall Street uses to keep suckers feeding into the game; a game they’ve fixed to win at our expense.
It may take another crash of the system – one worse than the previous two – before America wakes up and decides that a change needs to be made.