‘Flash Boys’ Author Says Einhorn Surprised By HFT Revelations

Apr 3 2014 | 10:33am ET

Greenlight Capital’s David Einhorn was shocked by what Michael Lewis learned about high-frequency trading, the author said yesterday.

Lewis, whose new book Flash Boys has caused a media firestorm on HFT, said that even the savvy hedge fund manager didn’t initially understand how high-frequency traders had, in Lewis’ words, “rigged” the U.S. stock markets. When he found out, he said, “Oh my God. This I did not know,” Lewis told Bloomberg Television yesterday.

Einhorn, an avid poker player, and other large investors are like “dumb tourists” lured into a casino where the card games are fixed, Lewis insisted.

“It’s very clear people are being front-run,” he said.

Lewis book has caused an uproar, with legislators and regulators increasing their scrutiny of HFT, high-frequency trading firm Virtu Financial postponing its initial public offering, and recriminations lobbed in both directions. This week, AQR Capital Management founder Clifford Asness took to The Wall Street Journal editorial page to proclaim that HFT actually helps large traders such as his firm by making markets and lowering prices.

Lewis has defended his conclusions, arguing that the reaction to Flash Boys is similar to the one seen 11 years ago to his book Moneyball, on the general manager of the Oakland Athletics. That book, which brought sabermetric baseball analysis to popular attention, was initially ridiculed for its treatment of the statistical analysis that has since become the norm in the sport.

“The disruption to the industry that caused feels a lot like this,” Lewis said.


In Depth

Q&A: Neil Azous Talks Global Macro Investing

Nov 24 2014 | 12:41pm ET

Neil Azous is the founder and managing member of Rareview Macro, an advisory firm...

Lifestyle

Griffin Selling Chicago Apartment

Nov 26 2014 | 11:40am ET

Citadel Investment Group’s Kenneth Griffin is making clear to his estranged wife...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.