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SEC chair to Congress: 'The markets are not rigged'

SEC Chairwoman Mary Jo White
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SEC Chairwoman Mary Jo White

Securities and Exchange Commission Chairwoman Mary Jo White on Tuesday responded directly to allegations in Michael Lewis' new book about high-frequency trading markets.

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"The markets are not rigged," she told a House panel. "The U.S. markets are the strongest and most reliable in the world."

White's comments come nearly a month after Lewis' "Flash Boys: A Wall Street Revolt" was published. The book has re-ignited a fierce debate over the role of high-speed trading, and whether it may leave some investors at an unfair disadvantage.

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Lewis alleges that high-frequency traders are engaged in a form of front-running, in which the firms are able to quickly identify an investor's desire to buy stock, rush to buy it first and then sell it back at a higher price.

Since the book was released, the FBI, the U.S. Attorney General, New York state prosecutors and the SEC have confirmed they are investigating the practices of high-speed firms.

White on Tuesday tried to soothe some concerns about whether firms are wrongfully trading ahead of others.

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She said it "is not unlawful insider-trading."

There has been some confusion between the idea of having an early sneak-peak at data, versus cases where firms are able to react more quickly to publicly available data.

—By Reuters

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