

Two traders arrested for exploiting weakness in HFT algorithm  - varjag
http://www.businessinsider.com/two-day-traders-arrested-for-cracking-a-brokerages-algorithm-2010-8

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Tichy
Whoa. Making profit on the stock market is illegal now, if you are not an
established firm? Shouldn't the company running the algorithm be blamed.

Is it the fault of the traders if the other traders are so stupid that their
actions can easily predicted (them being algorithms, for example)? Where is
the difference to predict the behaviour of human traders and earn money that
way - is it also ripping off other traders if you buy a share for 10$ from
them because you think it is worth 15$?

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borisk
>> Making profit on the stock market is illegal now, if you are not an
established firm?

Welcome to the real world ;-)

The established firms have a lot of political power and obviosly don't wont
competitors.

"Veiby earned 250,000 Norwegian kroner ($40,698) in the alleged scam while
Larsen earned 160,000 Norwegian kroner ($26,056)."

These sums are loose change in Norway, where a competent software developer
makes 500-900K krones per year. They probably also had to pay 40%+ tax. These
guys didn't thought they were doing something illegal.

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jcroberts
The article on zerohedge.com has more detail (and some nice but rough
translations).

[http://www.zerohedge.com/article/two-norwegians-
face-6-years...](http://www.zerohedge.com/article/two-norwegians-face-6-years-
prison-time-doing-what-hft-algos-do-us-every-single-day)

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kranner
What HFT fund _doesn't_ push orders they have no intent to trade on? AFAIK
decent crossing networks such as EBS/ICAP rate-limit orders anyway, because
they can't have half their customers arrested.

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HockeyPlayer
We don't. And I suspect that most HFT firms don't. There are both market and
regulatory risks in placing an order you don't want to fill.

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daemin
I almost get the feeling there were doing it just to see if they could. I mean
hasn't anyone here ever been tempted to reverse engineer a program or
encryption, just to see if they could?

